##### Table of Contents









UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





Form 10-K/A





Amendment No. 1


|   |  |                                                                                             
|-- |  | --------------------------------------------------------------------------------------------
|þ  |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934    
|  
|   |  | For the fiscal year ended August 28, 2004                                                   
|  
|or
|  
|o  |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934

American Achievement Corporation


(Exact name of registrant as specified in its charter)


|                                                                   |  |                                            
|------------------------------------------------------------------ |  | -------------------------------------------
|Delaware                                                           |  | 13-4126506                                 
|(State or other jurisdiction of
    incorporation or organization) |  | (I.R.S. Employer
    Identification Number)
|                                                                  
|7211 Circle S Road
    Austin, Texas                               |  | 78745                                      
|(Address of principal executive offices)                           |  | (Zip Code)                                 

Registrants telephone number, including area code


(512) 444-0571


Securities registered pursuant to Section 12(b) of the
Act:


|                    |  |                                          
|------------------- |  | -----------------------------------------
|Title of Each Class |  | Name of Each Exchange on Which Registered
|                    |  |                                          
|None                |  | None                                     

Securities registered pursuant to Section 12(g) of the
Act:


None


þ o





þ





o þ














---










AMERICAN ACHIEVEMENT CORPORATION





FORM 10-K/A





For the Fiscal Year Ended August 28, 2004


INDEX





|                                          |  |                                                                                           |    |      |    | 
|----------------------------------------- |  | ----------------------------------------------------------------------------------------- | -- | ---- | -- | 
|                                          |  |                                                                                           |    | Page |   
|                                          |  |                                                                                           |    |      |   
|PART I                                   
|Item 1.                                   |  | Business                                                                                  |    |      | 2  | 
|Item 2.                                   |  | Properties                                                                                |    |      | 10 | 
|Item 3.                                   |  | Legal Proceedings                                                                         |    |      | 11 | 
|Item 4.                                   |  | Submission of Matters to a Vote of Security
    Holders                                   |    |      | 12 | 
|PART II                                  
|Item 5.                                   |  | Market for Registrants Common Equity
    and Related Stockholder Matters                 |    |      | 12 | 
|Item 6.                                   |  | Selected Financial Data                                                                   |    |      | 12 | 
|Item 7.                                   |  | Managements Discussion and Analysis
    of Financial Condition and Results of Operations |    |      | 15 | 
|Item 7A.                                  |  | Quantitative and Qualitative Disclosures
    About Market Risks                           |    |      | 26 | 
|Item 8.                                   |  | Financial Statements and Supplementary
    Data                                           |    |      | 29 | 
|Item 9.                                   |  | Changes in and Disagreements with
    Accountants on Accounting and Financial Disclosure  |    |      | 63 | 
|Item 9A.                                  |  | Controls and Procedures                                                                   |    |      | 63 | 
|PART III                                 
|Item 10.                                  |  | Directors and Executive Officers of the
    Registrant                                    |    |      | 63 | 
|Item 11.                                  |  | Executive Compensation                                                                    |    |      | 65 | 
|Item 12.                                  |  | Security Ownership of Certain Beneficial
    Owners and Management                        |    |      | 68 | 
|Item 13.                                  |  | Certain Relationships and Related
    Transactions                                        |    |      | 69 | 
|Item 14.                                  |  | Principal Accountant Fees and Services                                                    |    |      | 69 | 
|PART IV                                  
|Item 15.                                  |  | Exhibits, Financial Statement Schedules and
    Reports on Form 8-K                       |    |      | 70 | 
|Signatures                                |  |                                                                                           | 71 |     
|CEO Certification Pursuant to Section 302
|CFO Certification Pursuant to Section 302
|CEO Certification Pursuant to Section 906
|CFO Certification Pursuant to Section 906






















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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS






| |   |                                                                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | future revenues are lower than expected;                                                                                                                             
|
| |  | increase in payroll or other costs and/or shortage of an
    adequate base of employees;                                                                             
|
| |  | loss of significant customers through bankruptcy, industry
    consolidation or other factors;                                                                       
|
| |  | inability to obtain additional capital due to covenant
    restrictions or other factors, and/or increase in debt levels
    beyond our ability to support repayment;
|
| |  | costs or difficulties relating to the integration of businesses
    that we acquire are greater than expected;                                                       
|
| |  | expected cost savings or revenues from our acquisitions are not
    fully realized or realized within the expected time frame;                                       
|
| |  | competitive pressures in the industry increase;                                                                                                                      
|
| |  | general economic conditions or conditions affecting our industry;                                                                                                    
|
| |  | changes in the interest rate environment, and                                                                                                                        






PART I







|        |         
|------- | --------
|Item 1. | Business




Recent Developments













General










2



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|                  |  |               |  |             |      |  |                       |                                                                                                                                                                                                                                                                                                               
|----------------- |  | ------------- |  | ----------- | ---- |  | --------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Company           |  | Acquired      |  | Established |      |  | Acquisition Rationale
|                  |  |               |  |             |      |  |                      
|Balfour           |  | December 1996 |  |             | 1913 |  |                       | Established a leading position in the high school and college
    class ring markets and in the graduation products market, with a
    network of independent sales representatives who market products
    directly in-school. Also combined with ArtCarved to provide more
    efficient ring manufacturing.
|ArtCarved         |  | December 1996 |  |             | 1941 |  |                       | Combined with Balfour to further strengthen our position in both
    the high school and college class rings markets and to expand
    distribution to retail stores and college bookstores.                                                                                                                  
|Taylor Publishing |  | July 2000     |  |             | 1914 |  |                       | Established a leadership position as a publisher of scholastic
    yearbooks. The addition of Taylor created a scale competitor to
    better capitalize on opportunities in the scholastic products
    market and provided us with significant cross-selling
    opportunities.                             

3



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|                             |  |              |  |             |      |  |                       |                                                                                                                                                                                                                     
|---------------------------- |  | ------------ |  | ----------- | ---- |  | --------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Company                      |  | Acquired     |  | Established |      |  | Acquisition Rationale
|                             |  |              |  |             |      |  |                      
|ECI                          |  | March 2001   |  |             | 1967 |  |                       | Established a leadership position in the achievement directory
    publishing niche.                                                                                                                                
|Milestone                    |  | July 2002    |  |             | 1993 |  |                       | Reinforced our position as a market leader in commemorative
    products, and brought a complementary line of clients and
    products to add to our pre-existing line in the college
    graduation product market.
|C-B Graduation Announcements |  | January 2004 |  |             | 1994 |  |                       | Reinforced our position as a market leader in commemorative
    products, and brought a complementary line of clients and
    products to add to our pre-existing line in the college
    graduation product market.




Products








Class Rings.








Yearbooks.





Graduation Products.





Achievement Publications.





Recognition and Affinity Jewelry.


4



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Our Product Business Segments
















|                         |  |                   |         |  |      |   |         |      |  |   |         | 
|------------------------ |  | ----------------- | ------- |  | ---- | - | ------- | ---- |  | - | ------- | 
|                         |  | Fiscal Year Ended |        
|                         |  |                   |        
|Segment                  |  | 2004(1)           |         |  | 2003 |   |         | 2002 | 
|                         |  |                   |         |  |      |   |         |      | 
|                         |  | ($ in thousands)  |        
|Class Rings              |  | $                 | 122,525 |  |      | $ | 127,624 |      |  | $ | 125,174 | 
|Yearbooks                |  |                   | 111,345 |  |      |   | 105,038 |      |  |   | 108,942 | 
|Graduation Products      |  |                   | 39,666  |  |      |   | 34,736  |      |  |   | 34,053  | 
|Achievement Publications |  |                   | 19,956  |  |      |   | 20,122  |      |  |   | 16,193  | 
|Other                    |  |                   | 20,579  |  |      |   | 20,911  |      |  |   | 20,016  | 
|                         |  |                   |         |  |      |   |         |      | 
|Total                    |  | $                 | 314,071 |  |      | $ | 308,431 |      |  | $ | 304,378 | 
|                         |  |                   |         |  |      |   |         |      | 












|    |                                                                                                                                           
|--- | ------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Fiscal year ended 2004 represents the combined periods of
    August 31, 2003 to March 25, 2004 and March 26,
    2004 to August 28, 2004.















|                                |  |                                        |  |                                          
|------------------------------- |  | -------------------------------------- |  | -----------------------------------------
|Product Lines                   |  | Brand Names                            |  | Distribution Channel                     
|                                |  |                                        |  |                                          
|High school class rings         |  | ArtCarved                              |  | Independent jewelry stores               
|                                |  |                                        |  | Jewelry chains                           
|                                |  | Balfour                                |  | On-campus                                
|                                |  | Keystone Class Rings                   |  | Mass merchandisers                       
|                                |  | Master Class Rings                     |  | Mass merchandisers                       
|                                |  | R. Johns                               |  | Mass merchandisers                       
|                                |  |                                        |  | Independent jewelry stores               
|College class rings             |  | ArtCarved                              |  | College bookstores                       
|                                |  | Balfour                                |  | College bookstores                       
|                                |  |                                        |  | Direct marketing                         
|Yearbooks                       |  | Taylor Publishing                      |  | On-campus                                
|High school graduation products |  | Balfour                                |  | On-campus                                
|College graduation products     |  | ArtCarved                              |  | College bookstores                       
|                                |  | Balfour                                |  | College bookstores                       
|                                |  |                                        |  | Direct marketing                         
|Achievement Publications        |  | Whos Who
    The National Deans List |  | Direct marketing
    Direct marketing    
|Affinity Group Jewelry          |  | Keepsake
    R. Johns                  |  | Direct marketing
    Direct marketing    
|Personalized Family Jewelry     |  | Celebrations of Life                   |  | Independent jewelry stores               
|                                |  |                                        |  | Jewelry chains                           
|                                |  | Generations of Love
    Namesake       |  | Mass merchandisers
    Mass merchandisers




5



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|                                         |  |                |  |                     
|---------------------------------------- |  | -------------- |  | --------------------
|Product Lines                            |  | Brand Names    |  | Distribution Channel
|                                         |  |                |  |                     
|Fan Affinity Sports Jewelry              |  | Balfour Sports |  | Mass merchandisers  
|                                         |  |                |  | Catalogues          
|Professional Sports Championship Jewelry |  | Balfour        |  | Direct marketing    




CLASS RINGS














YEARBOOKS


















6



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GRADUATION PRODUCTS















ACHIEVEMENT PUBLICATIONS









| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Whos Who Among American High School Students. First
    published in 1967, this annual publication is the largest
    academic achievement publication in the nation honoring
    high-achieving high school students. The 1st edition
    recognized approximately 13,000 students from approximately
    4,000 high schools. The current 37th edition honors
    approximately 720,000 students, from freshmen through
    seniors. Nominees represent over 22,000 of the nations
    approximately 23,000 private, public and parochial high
    schools on the basis of academic achievement, class rank and
    extracurricular activities.
|
| |  | Whos Who Among American High School
    Students  Sports Edition. Introduced in 2002,
    this annual publication, which recognizes high-achieving high
    school athletes, represented 50% of its market in 2003. The
    current 3rd edition of this publication honors
    approximately 44,000 students from approximately
    2,400 high schools.                                                                                                                                                                                                                                                                                         
|
| |  | The National Deans List. First published in 1978,
    this publication is the largest annual recognition publication
    in the nation honoring exceptional college students. The
    1st edition recognized over 25,000 students from
    approximately 700 universities. The most recent
    27th edition honors over 247,000 high-achieving
    students, representing in excess of 2,500 colleges and
    universities throughout the country.                                                                                                                                                                                               
|
| |  | Whos Who Among Americas Teachers. First
    published in 1990, this publication pays tribute to the
    countrys most inspiring high school teachers, who are
    nominated for inclusion by current and/or former
    Whos Who honorees. Historically published
    every two years, the 8th edition was published in 2004 and
    honored approximately 159,000 outstanding teachers. As of August
    2004, this publication will be produced annually.                                                                                                                                                                                  











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OTHER















| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Affinity Group Jewelry. Affinity group jewelry is sold to
    members of large groups and associations. The jewelry features
    emblems of, and otherwise commemorates accomplishments within,
    the group. For example, through our Keepsake brand, we provide
    affinity ring awards to the American Bowling Congress, including
    recognition rings for bowlers who score a perfect
    300 game. Through our Balfour brand, we provide
    affinity rings to military personnel that recognize affiliation
    and completion of specialized training ranging from basic
    training to special forces.                                                                                                                                                                                                                                                                                                                             
|
|
| |  | Personalized Family Jewelry. Our family jewelry products
    include rings commemorating childrens birth dates, which
    feature a level of personalization, such as birthstones and
    names, that distinguishes us from our competitors. We also sell
    other personalized jewelry, such as necklaces and bracelets,
    designed to commemorate family events. We started our family
    jewelry business in fiscal 1997 and, by the end of fiscal 2004,
    had grown this business to $8.4 million in net sales by
    leveraging our existing distribution channels. We intend to
    further grow our family jewelry business through product
    extensions, including baby rings for scrapbooks,
    grandmothers products such as pins and pendants,
    daughters rings and Sweet 16 memorabilia.
    We provide personalized family jewelry under our Celebrations of
    Life, Generations of Love and Namesake brand names.
|
| |  | Fan Affinity Sports Jewelry. We produce a variety of
    sports team affiliation products. For example, we manufacture
    Balfour Sports brand National Football League rings, pendants,
    paperweights and coasters reflecting team logos, mascots and
    colors.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | Professional Sports Championship Jewelry. We provide
    sports championship jewelry for professional teams and their
    members and have, for example, produced several World Series,
    Super Bowl and Stanley Cup rings, including all the rings for
    the New York Yankees 26 championships, and the 1999
    Japanese World Series ring. We provide sports championship
    jewelry under the Balfour brand.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

Sales and Marketing






8



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Intellectual Property








Competition












Raw Material and Suppliers




9



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Backlog




Employees











|        |           
|------- | ----------
|Item 2. | Properties



10



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##### Table of Contents





|                     |  |                                           |  |          |        |  |                |  |         | 
|-------------------- |  | ----------------------------------------- |  | -------- | ------ |  | -------------- |  | ------- | 
|                     |  |                                           |  | Leased   |        |  |               
|Approximate Location |  | Type of Property                          |  | or Owned |        |  | Square Footage | 
|                     |  |                                           |  |          |        |  |                | 
|Austin, TX           |  | Corporate headquarters                    |  |          | Owned  |  |                |  | 23,000  | 
|Austin, TX           |  | Jewelry manufacturing and administration  |  |          | Owned  |  |                |  | 108,000 | 
|Austin, TX           |  | Warehouse facility                        |  |          | Leased |  |                |  | 36,600  | 
|Austin, TX           |  | Achievement publication administration    |  |          | Leased |  |                |  | 6,100   | 
|Dallas, TX           |  | Yearbook administration and manufacturing |  |          | Owned  |  |                |  | 327,000 | 
|Dallas, TX           |  | Yearbook administration                   |  |          | Leased |  |                |  | 1,300   | 
|El Paso, TX          |  | Yearbook pre-press                        |  |          | Leased |  |                |  | 52,000  | 
|El Paso, TX          |  | Jewelry manufacturing                     |  |          | Leased |  |                |  | 20,000  | 
|Lubbock, TX          |  | Jewelry administration                    |  |          | Leased |  |                |  | 300     | 
|San Angelo, TX       |  | Yearbook pre-press, press, bindery        |  |          | Leased |  |                |  | 55,000  | 
|Malvern, PA          |  | Yearbook press, bindery                   |  |          | Leased |  |                |  | 41,000  | 
|Louisville, KY       |  | Graduation products manufacturing         |  |          | Leased |  |                |  | 100,000 | 
|Manhattan, KS        |  | Graduation products manufacturing         |  |          | Leased |  |                |  | 10,000  | 
|Juarez, Mexico       |  | Jewelry manufacturing                     |  |          | Leased |  |                |  | 20,000  | 






|        |                  
|------- | -----------------
|Item 3. | Legal Proceedings



















Environmental




11



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|        |                                                    
|------- | ---------------------------------------------------
|Item 4. | Submission of Matters to a Vote of Security Holders






PART II







|        |                                                                          
|------- | -------------------------------------------------------------------------
|Item 5. | Market for Registrants Common Equity and Related
    Stockholder Matters










|        |                        
|------- | -----------------------
|Item 6. | Selected Financial Data











12



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|                                                         |                  |                 |         |        |  |                 |   |         |                   |  |   |            |         |  |            |         |         |            |   |         |         |  |   |         |         | 
|-------------------------------------------------------- | ---------------- | --------------- | ------- | ------ |  | --------------- | - | ------- | ----------------- |  | - | ---------- | ------- |  | ---------- | ------- | ------- | ---------- | - | ------- | ------- |  | - | ------- | ------- | 
|                                                         |                  | Successor       |         |        |  | Predecessor     |  
|                                                         |                  |                 |         |        |  |                 |  
|                                                         |                  | The Period from |         |        |  | The Period from |   |         | Fiscal Year Ended | 
|                                                         |                  | March 26, 2004  |         |        |  | August 31, 2003 |   |         |                   | 
|                                                         |                  | to August 28,   |         |        |  | to March 25,    |   |         | August 30,        |  |   | August 31, |         |  | August 25, |         |         | August 26, |  
|                                                         |                  | 2004(1)         |         |        |  | 2004            |   |         | 2003              |  |   | 2002(2)    |         |  | 2001(3)    |         |         | 2000(4)    |  
|                                                         |                  |                 |         |        |  |                 |   |         |                   |  |   |            |         |  |            |         |         |            |  
|STATEMENT OF OPERATIONS DATA:                            |                  |                 |         |        |  |                 |   |         |                   |  |   |            |         |  |            |         |         |            |   |         |         |  |   |         |        
|Net sales                                                |                  | $               | 167,350 |        |  |                 | $ | 146,721 |                   |  | $ | 308,431    |         |  | $          | 304,378 |         |            | $ | 281,053 |         |  | $ | 182,285 |        
|Cost of sales                                            |                  |                 | 83,521  |        |  |                 |   | 59,857  |                   |  |   | 139,170    |         |  |            | 146,898 |         |            |   | 142,164 |         |  |   | 80,929  |        
|                                                         |                  |                 |         |        |  |                 |   |         |                   |  |   |            |         |  |            |         |         |            |  
|                                                         | Gross profit     |                 |         | 83,829 |  |                 |   |         | 86,864            |  |   |            | 169,261 |  |            |         | 157,480 |            |   |         | 138,889 |  |   |         | 101,356 | 
|Selling, general and administrative expenses             |                  |                 | 62,647  |        |  |                 |   | 74,992  |                   |  |   | 129,423    |         |  |            | 129,734 |         |            |   | 119,972 |         |  |   | 85,559  |        
|Loss (gain) on extinguishment of debt                    |                  |                 |        |        |  |                 |   |        |                   |  |   |           |         |  |            | 5,650   |         |            |   |        |         |  |   | (6,695  | )      
|                                                         |                  |                 |         |        |  |                 |   |         |                   |  |   |            |         |  |            |         |         |            |  
|                                                         | Operating income |                 |         | 21,182 |  |                 |   |         | 11,872            |  |   |            | 39,838  |  |            |         | 22,096  |            |   |         | 18,917  |  |   |         | 22,492  | 
|Interest expense                                         |                  |                 | 10,257  |        |  |                 |   | 16,455  |                   |  |   | 28,940     |         |  |            | 26,026  |         |            |   | 22,846  |         |  |   | 15,691  |        
|Other expense                                            |                  |                 |        |        |  |                 |   |        |                   |  |   |           |         |  |            | 2,783   |         |            |   |        |         |  |   |        |        
|                                                         |                  |                 |         |        |  |                 |   |         |                   |  |   |            |         |  |            |         |         |            |  
|Income (loss) before income taxes                        |                  |                 | 10,925  |        |  |                 |   | (4,583  | )                 |  |   | 10,898     |         |  |            | (6,713  | )       |            |   | (3,929  | )       |  |   | 6,801   |        
|                                                         |                  |                 |         |        |  |                 |   |         |                   |  |   |            |         |  |            |         |         |            |  
|Provision (benefit) for income taxes                     |                  |                 | 4,459   |        |  |                 |   |        |                   |  |   | 132        |         |  |            | (1,171  | )       |            |   | (1,443  | )       |  |   | 333     |        
|Cumulative effect of change in accounting principle-loss |                  |                 |        |        |  |                 |   |        |                   |  |   |           |         |  |            |        |         |            |   | 1,835   |         |  |   |        |        
|                                                         |                  |                 |         |        |  |                 |   |         |                   |  |   |            |         |  |            |         |         |            |  
|Net income (loss)                                        |                  | $               | 6,466   |        |  |                 | $ | (4,583  | )                 |  | $ | 10,766     |         |  | $          | (5,542  | )       |            | $ | (4,321  | )       |  | $ | 6,468   |        
|                                                         |                  |                 |         |        |  |                 |   |         |                   |  |   |            |         |  |            |         |         |            |  
|BALANCE SHEET DATA (AT END OF PERIOD):                   |                  |                 |         |        |  |                 |   |         |                   |  |   |            |         |  |            |         |         |            |   |         |         |  |   |         |        
|Total assets                                             |                  | $               | 530,986 |        |  |                 | $ | 553,589 |                   |  | $ | 395,501    |         |  | $          | 401,626 |         |            | $ | 384,971 |         |  | $ | 326,553 |        
|Total debt(5)                                            |                  |                 | 310,658 |        |  |                 |   | 313,040 |                   |  |   | 226,710    |         |  |            | 242,117 |         |            |   | 223,609 |         |  |   | 191,253 |        
|Total stockholders equity                               |                  |                 | 108,512 |        |  |                 |   | 102,046 |                   |  |   | 71,843     |         |  |            | 65,254  |         |            |   | 70,828  |         |  |   | 63,098  |        
|OTHER DATA:                                              |                  |                 |         |        |  |                 |   |         |                   |  |   |            |         |  |            |         |         |            |   |         |         |  |   |         |        
|EBITDA(6)                                                |                  |                 | 31,526  |        |  |                 |   | 20,402  |                   |  |   | 53,987     |         |  |            | 39,025  |         |            |   | 34,668  |         |  |   | 31,592  |        
|Capital expenditures                                     |                  |                 | 3,665   |        |  |                 |   | 12,793  |                   |  |   | 11,243     |         |  |            | 14,247  |         |            |   | 7,499   |         |  |   | 5,087   |        
|Depreciation and amortization                            |                  |                 | 10,344  |        |  |                 |   | 8,530   |                   |  |   | 14,149     |         |  |            | 19,712  |         |            |   | 17,586  |         |  |   | 9,100   |        









|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(1) | During the period from March 26, 2004 to August 28,
    2004, we recognized in our consolidated statement of operations
    approximately $6.4 million of excess purchase price
    allocated to inventory as cost of sales and approximately
    $4.3 million of additional amortization expense of
    intangible assets as selling, general and administrative
    expenses, as compared to our historical basis of accounting
    prior to the Merger.
|   
|   
|(2) | Includes the results of operations for Milestone Marketing
    Incorporated, or Milestone, from July 15, 2002, the date of
    our acquisition of Milestone.                                                                                                                                                                                                                                                                                              
|   
|   
|(3) | Includes the results of operations for Educational
    Communications, Inc., or ECI, from March 30, 2001, the date
    of our acquisition of ECI. ECI sales are highly seasonal, with
    most shipments during the first four months of our fiscal year.                                                                                                                                                                                                 
|   
|   
|(4) | Includes the results of Taylor Publishing from July 27,
    2000, the date of our acquisition of Taylor Publishing.                                                                                                                                                                                                                                                                                                                                       
|   
|(5) | Excludes (i) approximately $5.2 million,
    $4.5 million, $4.3 million, $4.9 million,
    $2.5 million, and $5.7 million of bank overdrafts and
    (ii) approximately $0.0, $0.1 million,
    $0.1 million, $2.2 million, $4.5 million, and
    $3.9 million of capital lease obligations, in each case, as
    of August 26, 2000, August 25, 2001, August 31,
    2002, August 30, 2003, March 25, 2004 and
    August 28, 2004, respectively.        
|   
|(6) | EBITDA represents net income (loss) before interest expense,
    income taxes, depreciation and amortization. EBITDA does not
    represent net income or cash flows from operations, as these
    terms                                                                                                                                                                                                                                                  

13



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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | are defined under generally accepted accounting principles, and
    should not be considered as an alternative to net income as an
    indicator of our operating performance or to cash flows as a
    measure of liquidity. We consider EBITDA to be a key indicator
    of operating performance as it and similar measures are
    instrumental in the determination of compliance with certain
    financial covenants in the senior secured credit facility, and
    is used by our management in the calculation of the aggregate
    fee payable under our management agreement and in determining a
    portion of compensation for certain of our employees. We also
    believe that EBITDA is useful to investors in evaluating the
    value of companies in general, and in evaluating the liquidity
    of companies with debt service obligations and their ability to
    service their indebtedness.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | EBITDA is not a defined term under GAAP and should not be
    considered an alternative to operating income or net income as a
    measure of operating results or cash flows as a measure of
    liquidity. EBITDA has important limitations as an analytical
    tool, and you should not consider it in isolation or as a
    substitute for analysis of our results as reported under GAAP.
    For example, EBITDA: (i) does not reflect our cash
    expenditures, or future requirements, for capital expenditures
    or contractual commitments; (ii) does not reflect changes
    in, or cash requirements for, our working capital needs;
    (iii) does not reflect the significant interest expense, or
    the cash requirements necessary to service interest or principal
    payments, on our debts; (iv) excludes tax payments that
    represent a reduction in cash available to us; and (v) does
    not reflect any cash requirements for the assets being
    depreciated and amortized that may have to be replaced in the
    future. Despite these limitations, we believe that EBITDA is
    useful, however, since it provides investors with additional
    information not available in a GAAP presentation. To compensate
    for these limitations, however, we rely primarily on our GAAP
    results and use EBITDA only supplementally.



|                  |                                                           |                 |        |         |   |                 |   |        |                   |   |   |            |         |   |            |        |         |            |   |        |         |   |   |        |         |  
|----------------- | --------------------------------------------------------- | --------------- | ------ | ------- | - | --------------- | - | ------ | ----------------- | - | - | ---------- | ------- | - | ---------- | ------ | ------- | ---------- | - | ------ | ------- | - | - | ------ | ------- | -
|                  |                                                           | Successor       |        |         |   | Predecessor     |  
|                  |                                                           |                 |        |         |   |                 |  
|                  |                                                           | The Period from |        |         |   | The Period from |   |        | Fiscal Year Ended |  
|                  |                                                           | March 26, 2004  |        |         |   | August 31, 2003 |   |        |                   |  
|                  |                                                           | to August 28,   |        |         |   | to March 25,    |   |        | August 30,        |   |   | August 31, |         |   | August 25, |        |         | August 26, |  
|                  |                                                           | 2004(a)         |        |         |   | 2004            |   |        | 2003              |   |   | 2002       |         |   | 2001       |        |         | 2000       |  
|                  |                                                           |                 |        |         |   |                 |   |        |                   |   |   |            |         |   |            |        |         |            |  
|Net income (loss) |                                                           | $               | 6,466  |         |   |                 | $ | (4,583 | )                 |   | $ | 10,766     |         |   | $          | (5,542 | )       |            | $ | (4,321 | )       |   | $ | 6,468  |        
|                  | Interest expense                                          |                 |        | 10,257  |   |                 |   |        | 16,455            |   |   |            | 28,940  |   |            |        | 26,026  |            |   |        | 22,846  |   |   |        | 15,691  |  
|                  | Provision (benefit) for income taxes                      |                 |        | 4,459   |   |                 |   |        |                  |   |   |            | 132     |   |            |        | (1,171  | )          |   |        | (1,443  | ) |   |        | 333     |  
|                  | Depreciation and amortization expense                     |                 |        | 10,344  |   |                 |   |        | 8,530             |   |   |            | 14,149  |   |            |        | 19,712  |            |   |        | 17,586  |   |   |        | 9,100   |  
|                  |                                                           |                 |        |         |   |                 |   |        |                   |   |   |            |         |   |            |        |         |            |  
|EBITDA            |                                                           | $               | 31,526 |         |   |                 | $ | 20,402 |                   |   | $ | 53,987     |         |   | $          | 39,025 |         |            | $ | 34,668 |         |   | $ | 31,592 |        
|                  |                                                           |                 |        |         |   |                 |   |        |                   |   |   |            |         |   |            |        |         |            |  
|                  | Changes in assets and liabilities                         |                 | $      | (24,939 | ) |                 |   | $      | 35,227            |   |   | $          | (92     | ) |            | $      | 1,808   |            |   | $      | (6,761  | ) |   | $      | (18,825 | )
|                  | Deferred income taxes                                     |                 |        | 4,309   |   |                 |   |        |                  |   |   |            |        |   |            |        |        |            |   |        |        |   |   |        |        |  
|                  | Interest expense, net                                     |                 |        | (10,257 | ) |                 |   |        | (16,455           | ) |   |            | (28,940 | ) |            |        | (26,026 | )          |   |        | (22,846 | ) |   |        | (15,691 | )
|                  | Income tax provision (benefit)                            |                 |        | (4,459  | ) |                 |   |        |                  |   |   |            | (132    | ) |            |        | 1,171   |            |   |        | 1,443   |   |   |        | (333    | )
|                  | Amortization of debt discount and deferred financing fees |                 |        | 629     |   |                 |   |        | 1,197             |   |   |            | 2,051   |   |            |        | 1,355   |            |   |        | 1,534   |   |   |        |        |  
|                  | Provision for doubtful accounts                           |                 |        | (236    | ) |                 |   |        | (144              | ) |   |            | (376    | ) |            |        | 145     |            |   |        | 383     |   |   |        | 630     |  
|                  | Loss on extinguishment of debt                            |                 |        |        |   |                 |   |        |                  |   |   |            |        |   |            |        | 5,650   |            |   |        |        |   |   |        | (6,741  | )
|                  | Unrealized loss on free-standing derivative               |                 |        |        |   |                 |   |        |                  |   |   |            |        |   |            |        | 182     |            |   |        |        |   |   |        |        |  

14



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|                                                    |                                                     |                 |        |   |                 |   |        |                   |  |   |            |   |  |            |        |   |            |   |        |       |  |   |        |   | 
|--------------------------------------------------- | --------------------------------------------------- | --------------- | ------ | - | --------------- | - | ------ | ----------------- |  | - | ---------- | - |  | ---------- | ------ | - | ---------- | - | ------ | ----- |  | - | ------ | - | 
|                                                    |                                                     | Successor       |        |   | Predecessor     |  
|                                                    |                                                     |                 |        |   |                 |  
|                                                    |                                                     | The Period from |        |   | The Period from |   |        | Fiscal Year Ended | 
|                                                    |                                                     | March 26, 2004  |        |   | August 31, 2003 |   |        |                   | 
|                                                    |                                                     | to August 28,   |        |   | to March 25,    |   |        | August 30,        |  |   | August 31, |   |  | August 25, |        |   | August 26, |  
|                                                    |                                                     | 2004(a)         |        |   | 2004            |   |        | 2003              |  |   | 2002       |   |  | 2001       |        |   | 2000       |  
|                                                    |                                                     |                 |        |   |                 |   |        |                   |  |   |            |   |  |            |        |   |            |  
|                                                    | Cumulative effect of change in accounting principle |                 |        |  |                 |   |        |                  |  |   |            |  |  |            |        |  |            |   |        | 1,835 |  |   |        |  | 
|                                                    |                                                     |                 |        |   |                 |   |        |                   |  |   |            |   |  |            |        |   |            |  
|Net cash provided by (used in) operating activities |                                                     | $               | (3,427 | ) |                 | $ | 40,227 |                   |  | $ | 26,498     |   |  | $          | 23,310 |   |            | $ | 10,256 |       |  | $ | (9,368 | )
|                                                    |                                                     |                 |        |   |                 |   |        |                   |  |   |            |   |  |            |        |   |            |  






|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(a) |  | During the period from March 26, 2004 to August 28,
    2004, we recognized in our consolidated statement of operations
    approximately $6.4 million of excess purchase price
    allocated to inventory as cost of sales and approximately
    $4.3 million of additional amortization expense of
    intangible assets as selling, general and administrative
    expenses, as compared to its historical basis of accounting
    prior to the Merger.
|   






|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations

The following discussion of our financial condition and
results of operations should be read together with our
consolidated financial statements and the accompanying notes
included with this report. For the ease of comparison purposes,
financial data for the period of August 31, 2003 through
March 25, 2004 has been added to financial data for the
periods from March 26, 2004 to August 28, 2004 and
give effect to the Merger and the acquisition of C-B Graduation
Announcements, as if each occurred as of August 31, 2003,
to arrive at a fiscal year pro forma period ended
August 28, 2004. This period may be referred to herein as
the pro forma year ended August 28, 2004 or the
pro forma fiscal 2004. The Consolidated Financial
Statements, and the notes thereto, have been prepared in
accordance with U.S. GAAP. In reviewing this comparative
financial information, readers should remember that Predecessor
period results of operations do not reflect the effects of the
acquisition and the application of purchase accounting. All
amounts are in U.S. Dollars except otherwise indicated.










General














15



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Company Background






16



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|                                               |                     |  |          |   |  |   |         |        | 
|---------------------------------------------- | ------------------- |  | -------- | - |  | - | ------- | ------ | 
|Purchase price                                 |                     |  |          |   |  | $ | 419,200 |       
|Assets acquired                                |                     |  | 197,714  |   |  |   |         |       
|Liabilities assumed                            |                     |  | (125,731 | ) |  |   |         |       
|                                               |                     |  |          |   |  |  
|                                               | Net assets acquired |  |          |   |  |   |         | 71,983 | 
|                                               |                     |  |          |   |  |  
|Excess purchase price over net assets acquired |                     |  |          |   |  | $ | 347,217 |       
|                                               |                     |  |          |   |  |  

















|                              |                      |   |          |         | 
|----------------------------- | -------------------- | - | -------- | ------- | 
|Current assets                |                      | $ | 123,407  |        
|Property, plant and equipment |                      |   | 78,301   |        
|Goodwill                      |                      |   | 181,361  |        
|Intangible assets             |                      |   | 157,928  |        
|Other assets                  |                      |   | 15,390   |        
|Current liabilities           |                      |   | (116,102 | )      
|Deferred income taxes         |                      |   | (12,043  | )      
|Other long-term liabilities   |                      |   | (9,042   | )      
|                              |                      |   |         
|                              | Total purchase price |   | $        | 419,200 | 
|                              |                      |   |         








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Critical Accounting Policies







Sales Returns and Allowances.








Allowance for Doubtful Accounts and Reserve on Sales
Representative Advances.





Goodwill and Other Intangible Assets.




Long-lived Tangible and Intangible Assets with Definite
Lives.


18



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Results of Operations


Predecessor and Successor Company and Fiscal Year
Comparisons










19



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|                                                               |                                   |                |       |           |                   |   |       |            |   |                   |          |               |                   |            |       |      |          |   |       |            |  |  |          |      |   |   |       |       |   |  |       |      |   
|-------------------------------------------------------------- | --------------------------------- | -------------- | ----- | --------- | ----------------- | - | ----- | ---------- | - | ----------------- | -------- | ------------- | ----------------- | ---------- | ----- | ---- | -------- | - | ----- | ---------- |  |  | -------- | ---- | - | - | ----- | ----- | - |  | ----- | ---- | --
|                                                               |                                   | (Successor)    |       |           | (Predecessor)     |   |       |            |   |                   |          | (Predecessor) |                  
|                                                               |                                   |                |       |           |                   |   |       |            |   |                   |         
|                                                               |                                   |                |       | Pro Forma |                   |   |      
|                                                               |                                   | For the Period |       |           | Fiscal Year Ended |   |       |           
|                                                               |                                   |                |       |           |                   |   |       |            |   |                  
|                                                               |                                   | March 26,      |       |           | August 31,        |   |       |            |   | Fiscal Year Ended |          |               | Fiscal Year Ended |           
|                                                               |                                   | 2004          |       |           | 2003             |   |       |            |   |                   |          |               |                   |           
|                                                               |                                   | August 28,     |       |           | March 25,         |   |       | August 28, |   |                   | % of Net |               |                   | August 30, |       |      | % of Net |   |       | August 31, |  |  | % of Net |     
|                                                               |                                   | 2004           |       |           | 2004              |   |       | 2004       |   |                   | Sales    |               |                   | 2003       |       |      | Sales    |   |       | 2002       |  |  | Sales    |     
|                                                               |                                   |                |       |           |                   |   |       |            |   |                   |          |               |                   |            |       |      |          |   |       |            |  |  |          |     
|Net sales                                                      |                                   | $              | 167.4 |           |                   | $ | 146.7 |            |   | $                 | 315.1    |               |                   |            | 100.0 | %    |          | $ | 308.4 |            |  |  | 100.0    | %    |   | $ | 304.4 |       |   |  | 100.0 | %   
|Cost of sales                                                  |                                   |                | 83.5  |           |                   |   | 59.9  |            |   |                   | 144.0    |               |                   |            | 45.7  |      |          |   | 139.2 |            |  |  | 45.1     |      |   |   | 146.9 |       |   |  | 48.3  |     
|                                                               |                                   |                |       |           |                   |   |       |            |   |                   |          |               |                   |            |       |      |          |   |       |            |  |  |          |     
|                                                               | Gross profit                      |                |       | 83.9      |                   |   |       | 86.8       |   |                   |          | 171.1         |                   |            |       | 54.3 |          |   |       | 169.2      |  |  |          | 54.9 |   |   |       | 157.5 |   |  |       | 51.7 |   
|Selling, general and administrative expense                    |                                   |                | 62.7  |           |                   |   | 74.9  |            |   |                   | 143.9    |               |                   |            | 45.7  |      |          |   | 129.4 |            |  |  | 42.0     |      |   |   | 129.7 |       |   |  | 42.6  |     
|Loss on extinguishment of debt                                 |                                   |                |      |           |                   |   |      |            |   |                   |         |               |                   |            |      |      |          |   |      |            |  |  |         |      |   |   | 5.6   |       |   |  | 1.8   |     
|                                                               |                                   |                |       |           |                   |   |       |            |   |                   |          |               |                   |            |       |      |          |   |       |            |  |  |          |     
|                                                               | Operating income                  |                |       | 21.2      |                   |   |       | 11.9       |   |                   |          | 27.2          |                   |            |       | 8.6  |          |   |       | 39.8       |  |  |          | 12.9 |   |   |       | 22.1  |   |  |       | 7.3  |   
|Interest expense                                               |                                   |                | 10.2  |           |                   |   | 16.5  |            |   |                   | 24.1     |               |                   |            | 7.6   |      |          |   | 28.9  |            |  |  | 9.4      |      |   |   | 26.0  |       |   |  | 8.6   |     
|Other expense                                                  |                                   |                |      |           |                   |   |      |            |   |                   |         |               |                   |            |      |      |          |   |      |            |  |  |         |      |   |   | 2.8   |       |   |  | 0.9   |     
|                                                               |                                   |                |       |           |                   |   |       |            |   |                   |          |               |                   |            |       |      |          |   |       |            |  |  |          |     
|                                                               | Income (loss) before income taxes |                |       | 11.0      |                   |   |       | (4.6       | ) |                   |          | 3.1           |                   |            |       | 1.0  |          |   |       | 10.9       |  |  |          | 3.5  |   |   |       | (6.7  | ) |  |       | (2.2 | ) 
|                                                               |                                   |                |       |           |                   |   |       |            |   |                   |          |               |                   |            |       |      |          |   |       |            |  |  |          |     
|Provision (benefit) for income taxes                           |                                   |                | 4.5   |           |                   |   |      |            |   |                   | 1.2      |               |                   |            | 0.4   |      |          |   | 0.1   |            |  |  |         |      |   |   | (1.2  | )     |   |  | (0.4  | )   
|Cumulative effect of change in accounting principle 
    loss |                                   |                |      |           |                   |   |      |            |   |                   |         |               |                   |            |      |      |          |   |      |            |  |  |         |      |   |   |      |       |   |  |      |     
|                                                               |                                   |                |       |           |                   |   |       |            |   |                   |          |               |                   |            |       |      |          |   |       |            |  |  |          |     
|                                                               | Net income (loss)                 |                | $     | 6.5       |                   |   | $     | (4.6       | ) |                   | $        | 1.9           |                   |            |       | 0.6  | %        |   | $     | 10.8       |  |  |          | 3.5  | % |   | $     | (5.5  | ) |  |       | (1.8 | )%
|                                                               |                                   |                |       |           |                   |   |       |            |   |                   |          |               |                   |            |       |      |          |   |       |            |  |  |          |     



| |                                                                 
| | ----------------------------------------------------------------
| | For the Period March 26, 2004 to August 28, 2004
    (Successor)





| |                                                                   
| | ------------------------------------------------------------------
| | For the Period August 31, 2003 to March 25, 2004
    (Predecessor)



20



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| |                                                                                                        
| | -------------------------------------------------------------------------------------------------------
| | For the Pro Forma Year Ended August 28, 2004
    (unaudited) Compared to Year Ended August 30,
    2003




Net Sales.









| |   |                                                                                                                                                                                                                                                                                                                                                                                                           
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Class Rings.Net sales decreased $5.1 million to
    $122.5 million for the pro forma fiscal 2004 from
    $127.6 million for fiscal 2003. The decrease in net sales
    was the result of a $2.9 million decline in sales of retail
    and high school rings and a $3.4 million decline in college
    ring sales. This decline was offset by a $1.2 million
    increase in high school on-campus rings.
|
|
|
| |  | Yearbooks.Net sales increased $6.3 million to
    $111.3 million for the pro forma fiscal 2004 from
    $105.0 million for fiscal 2003. The increase in net sales
    was the result of an increase in yearbook shipments.                                                                                                                                                                                
|
|
|
| |  | Graduation Products.Net sales increased
    $6.0 million to $40.7 million for the pro forma fiscal
    2004 from $34.7 million for fiscal 2003. The favorability
    in net sales was the result of a increase in shipments of
    graduation products, of which $3.9 million was directly
    related to the C-B Graduation Announcements acquisition.                                                   
|
|
|
| |  | Achievement Publications.Net sales decreased
    $0.1 million to $20.0 million for the pro forma fiscal
    2004 from $20.1 million for fiscal 2003.                                                                                                                                                                                                                                                      
|
|
|
| |  | Other.Net sales decreased $0.3 million to
    $20.6 million for the pro forma fiscal 2004 from
    $20.9 million for fiscal 2003. The decrease in net sales
    was primarily related to decreases in sales of specialty
    products offset by an increase in family jewelry.                                                                                                                            
|

Gross Profit.


Selling, General and Administrative
Expenses.




21



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Operating Income.





Interest Expense.


Provision for Income Taxes.


Net Income.




| |                                                                                    
| | -----------------------------------------------------------------------------------
| | Fiscal Year Ended August 30, 2003 Compared To Fiscal
    Year Ended August 31, 2002

Net Sales.









| |   |                                                                                                                                                                                                                 
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Class Rings.Net sales increased $2.4 million to
    $127.6 million for fiscal 2003 from $125.2 million for
    fiscal 2002. The increase in net sales was the result of an
    increase in college ring sales of




22



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| |   |                                                                                                                                                                                                                                                                                                                                   
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |   | $4.4 million related to the acquisition of Milestone and a
    $1.1 million increase in on-campus high school rings,
    partially offset by a decline in college ring sales and retail
    ring sales.                                                                                                                           
|
|
|
| |  | Yearbooks.Net sales decreased $3.9 million to
    $105.0 million for fiscal 2003 from $108.9 million for
    fiscal 2002. The decrease in net sales was the result of a
    decrease in yearbook contracts, largely as a result of the
    fourth quarter of fiscal 2002 containing an extra week.                                
|
|
|
| |  | Graduation Products.Net sales increased
    $0.6 million to $34.7 million for fiscal 2003 from
    $34.1 million for fiscal 2002. The increase in net sales
    was the result of an increase in shipments of graduation
    products.                                                                                            
|
|
|
| |  | Achievement Publications.Net sales increased
    $3.9 million to $20.1 million for fiscal 2003 from
    $16.2 million for fiscal 2002. The increase in net sales
    was primarily the result of our teachers publication in fiscal
    2003.                                                                                     
|
|
|
| |  | Other.Net sales increased $0.9 million to
    $20.9 million for fiscal 2003 from $20.0 million for
    fiscal 2002. The increase in net sales was related to increased
    sales of specialty products, partially offset by a
    $2.2 million decrease resulting from the discontinuation of
    reunion services in fiscal 2002.
|

Gross Profit.


Selling, General and Administrative Expenses.


Loss on Extinguishment of Debt.





Operating Income.





23



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Interest Expense, Net.


Other Expense.


Provision (Benefit) for Income Taxes.


Net Income (Loss).


Liquidity and Capital Resources


Operating Activities.







Investing Activities.





Financing Activities.


24



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Capital Resources.













Off Balance-Sheet Obligations


Gold Consignment Agreement.




25



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Contractual Obligations




|                                   |  |        |        |  |        |   |        |        |  |   |        |  |  |        |        |  |            |   |        |       |  |   |         |  |  |   |         | 
|---------------------------------- |  | ------ | ------ |  | ------ | - | ------ | ------ |  | - | ------ |  |  | ------ | ------ |  | ---------- | - | ------ | ----- |  | - | ------- |  |  | - | ------- | 
|                                   |  | Fiscal |        |  | Fiscal |   |        | Fiscal |  |   | Fiscal |  |  | Fiscal |        |  |            |   |       
|                                   |  | 2005   |        |  | 2006   |   |        | 2007   |  |   | 2008   |  |  | 2009   |        |  | Thereafter |   |        | Total | 
|                                   |  |        |        |  |        |   |        |        |  |   |        |  |  |        |        |  |            |   |        |       | 
|81/4% Senior
    subordinated debt |  | $      |       |  |        | $ |       |        |  | $ |       |  |  | $      |       |  |            | $ |       |       |  | $ | 150,000 |  |  | $ | 150,000 | 
|115/8% Senior
    unsecured notes  |  |        |       |  |        |   |       |        |  |   | 6,045  |  |  |        |       |  |            |   |       |       |  |   |        |  |  |   | 6,045   | 
|Interest on fixed rate debt        |  |        | 13,081 |  |        |   | 13,081 |        |  |   | 12,728 |  |  |        | 12,375 |  |            |   | 12,375 |       |  |   | 31,969  |  |  |   | 95,609  | 
|Term loan(a)                       |  |        | 1,550  |  |        |   | 1,550  |        |  |   | 1,550  |  |  |        | 1,550  |  |            |   | 1,550  |       |  |   | 146,863 |  |  |   | 154,613 | 
|Operating leases(b)                |  |        | 2,206  |  |        |   | 1,835  |        |  |   | 1,322  |  |  |        | 817    |  |            |   | 315    |       |  |   | 2,404   |  |  |   | 8,899   | 
|Capital leases(c)                  |  |        | 1,387  |  |        |   | 1,349  |        |  |   | 1,332  |  |  |        | 174    |  |            |   |       |       |  |   |        |  |  |   | 4,242   | 
|                                   |  |        |        |  |        |   |        |        |  |   |        |  |  |        |        |  |            |   |        |       | 
|Total                              |  | $      | 18,224 |  |        | $ | 17,815 |        |  | $ | 22,977 |  |  | $      | 14,916 |  |            | $ | 14,240 |       |  | $ | 331,236 |  |  | $ | 419,408 | 
|                                   |  |        |        |  |        |   |        |        |  |   |        |  |  |        |        |  |            |   |        |       | 






|    |  |                                                                                                                                                                                        
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(a) |  | No interest expense has been included on our $154.6 million
    obligation with a variable interest rate.                                                                              
|   
|   
|(b) |  | Some of our rental property leases contain options to renew the
    leased space for periods up to an additional ten years.                                                            
|   
|(c) |  | The total balance of gross capital lease assets is $5,022 as of
    August 28, 2004 and $2,797 as of August 30, 2003, with
    accumulated depreciation of $284 and $292, respectively.



Seasonality











|         |                                                                
|-------- | ---------------------------------------------------------------
|Item 7A. | Quantitative and Qualitative Disclosures About Market
    Risks

Interest Rate Risk.


26



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##### Table of Contents



Semi-Precious Stones.


Gold.


Recent Accounting Pronouncements












27



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##### Table of Contents











Consolidation of Variable
Interest Entities.




28



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|        |                                            
|------- | -------------------------------------------
|Item 8. | Financial Statements and Supplementary Data

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM






















Deloitte & Touche
LLP












29



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AMERICAN ACHIEVEMENT CORPORATION


CONSOLIDATED BALANCE SHEETS


(Dollars in thousands)





|                                           |                                                                                                                                                                                             |                                            |         |         |               |  |         |         |         | 
|------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------- | ------- | ------------- |  | ------- | ------- | ------- | 
|                                           |                                                                                                                                                                                             | (Successor)                                |         |         | (Predecessor) | 
|                                           |                                                                                                                                                                                             |                                            |         |         |               | 
|                                           |                                                                                                                                                                                             | August 28,                                 |         |         | August 30,    | 
|                                           |                                                                                                                                                                                             | 2004                                       |         |         | 2003          | 
|                                           |                                                                                                                                                                                             |                                            |         |         |               | 
|ASSETS                                    
|CURRENT ASSETS:                            |                                                                                                                                                                                             |                                            |         |         |               |  |         |        
|                                           | Cash and cash equivalents                                                                                                                                                                   |                                            | $       | 3,038   |               |  | $       | 1,735   |        
|                                           | Accounts receivable, net of allowance for doubtful accounts of
    $2,862 and $3,242, respectively                                                                                          |                                            |         | 43,321  |               |  |         | 44,193  |        
|                                           | Inventories, net                                                                                                                                                                            |                                            |         | 23,023  |               |  |         | 23,310  |        
|                                           | Deferred tax asset                                                                                                                                                                          |                                            |         | 10,165  |               |  |         | 6,378   |        
|                                           | Prepaid expenses and other current assets, net                                                                                                                                              |                                            |         | 26,230  |               |  |         | 23,939  |        
|                                           |                                                                                                                                                                                             |                                            |         |         |               | 
|                                           |                                                                                                                                                                                             | Total current assets                       |         |         | 105,777       |  |         |         | 99,555  | 
|PROPERTY, PLANT AND EQUIPMENT, net         |                                                                                                                                                                                             |                                            | 76,565  |         |               |  | 65,307  |        
|GOODWILL                                   |                                                                                                                                                                                             |                                            | 182,080 |         |               |  | 162,059 |        
|Other intangible assets, net               |                                                                                                                                                                                             |                                            | 163,473 |         |               |  | 60,214  |        
|OTHER ASSETS                               |                                                                                                                                                                                             |                                            | 3,091   |         |               |  | 8,366   |        
|                                           |                                                                                                                                                                                             |                                            |         |         |               | 
|                                           |                                                                                                                                                                                             | Total assets                               |         | $       | 530,986       |  |         | $       | 395,501 | 
|                                           |                                                                                                                                                                                             |                                            |         |         |               | 
|                                          
|LIABILITIES AND STOCKHOLDERS EQUITY      
|CURRENT LIABILITIES:                       |                                                                                                                                                                                             |                                            |         |         |               |  |         |        
|                                           | Bank overdraft                                                                                                                                                                              |                                            | $       | 5,733   |               |  | $       | 4,877   |        
|                                           | Accounts payable                                                                                                                                                                            |                                            |         | 9,842   |               |  |         | 6,564   |        
|                                           | Customer deposits                                                                                                                                                                           |                                            |         | 17,807  |               |  |         | 21,393  |        
|                                           | Accrued expenses                                                                                                                                                                            |                                            |         | 29,814  |               |  |         | 26,106  |        
|                                           | Accrued management fee  related party                                                                                                                                                      |                                            |         | 500     |               |  |         | 750     |        
|                                           | Deferred revenue                                                                                                                                                                            |                                            |         | 5,503   |               |  |         | 5,123   |        
|                                           | Accrued interest                                                                                                                                                                            |                                            |         | 7,334   |               |  |         | 4,231   |        
|                                           | Current portion of long-term debt                                                                                                                                                           |                                            |         | 1,550   |               |  |         |        |        
|                                           |                                                                                                                                                                                             |                                            |         |         |               | 
|                                           |                                                                                                                                                                                             | Total current liabilities                  |         |         | 78,083        |  |         |         | 69,044  | 
|LONG-TERM DEBT, net of current portion     |                                                                                                                                                                                             |                                            | 309,108 |         |               |  | 226,710 |        
|Deferred income taxes                      |                                                                                                                                                                                             |                                            | 25,844  |         |               |  | 6,378   |        
|OTHER LONG-TERM LIABILITIES                |                                                                                                                                                                                             |                                            | 9,439   |         |               |  | 3,476   |        
|                                           |                                                                                                                                                                                             |                                            |         |         |               | 
|                                           |                                                                                                                                                                                             | Total liabilities                          |         |         | 422,474       |  |         |         | 305,608 | 
|REDEEMABLE MINORITY INTEREST IN SUBSIDIARY |                                                                                                                                                                                             |                                            |        |         |               |  | 18,050  |        
|COMMITMENTS AND CONTINGENCIES              |                                                                                                                                                                                             |                                            |         |         |               |  |         |        
|STOCKHOLDERS EQUITY:                      |                                                                                                                                                                                             |                                            |         |         |               |  |         |        
|                                           | Preferred stock, $.01 par value, 1,200,000 shares
    authorized, 1,007,366 shares issued and outstanding at
    August 30, 2003; liquidation preference of $100,737 at
    August 30, 2003 |                                            |         |        |               |  |         | 10      |        
|                                           | Common stock, $.01 par value, 1,000 and
    1,250,000 shares authorized, respectively, 100 and
    809,775 shares issued and outstanding, respectively                                      |                                            |         |        |               |  |         | 8       |        
|                                           | Additional paid-in capital                                                                                                                                                                  |                                            |         | 102,046 |               |  |         | 95,350  |        
|                                           | Accumulated earnings (deficit)                                                                                                                                                              |                                            |         | 6,466   |               |  |         | (18,375 | )      
|                                           | Accumulated other comprehensive loss                                                                                                                                                        |                                            |         |        |               |  |         | (5,150  | )      
|                                           |                                                                                                                                                                                             |                                            |         |         |               | 
|                                           |                                                                                                                                                                                             | Total stockholders equity                 |         |         | 108,512       |  |         |         | 71,843  | 
|                                           |                                                                                                                                                                                             |                                            |         |         |               | 
|                                           |                                                                                                                                                                                             | Total liabilities and stockholders equity |         | $       | 530,986       |  |         | $       | 395,501 | 
|                                           |                                                                                                                                                                                             |                                            |         |         |               | 






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AMERICAN ACHIEVEMENT CORPORATION


CONSOLIDATED STATEMENTS OF OPERATIONS


(Dollars in thousands)


|                                             |                                                     |                 |         |        |                  |                    |         |            |   |   |            |         |   |   |         |         |  
|-------------------------------------------- | --------------------------------------------------- | --------------- | ------- | ------ | ---------------- | ------------------ | ------- | ---------- | - | - | ---------- | ------- | - | - | ------- | ------- | -
|                                             |                                                     | (Successor)     |         |        | (Predecessor)    |                   
|                                             |                                                     |                 |         |        |                  |                   
|                                             |                                                     |                 |         |        |                  | For the Year Ended |        
|                                             |                                                     | For the Period  |         |        | For the Period   |                    |         |            |  
|                                             |                                                     | March 26, 2004- |         |        | August 31, 2003- |                    |         | August 30, |   |   | August 31, |        
|                                             |                                                     | August 28, 2004 |         |        | March 25, 2004   |                    |         | 2003       |   |   | 2002       |        
|                                             |                                                     |                 |         |        |                  |                    |         |            |   |   |            |        
|Net sales                                    |                                                     | $               | 167,350 |        |                  | $                  | 146,721 |            |   | $ | 308,431    |         |   | $ | 304,378 |        
|Cost of sales                                |                                                     |                 | 83,521  |        |                  |                    | 59,857  |            |   |   | 139,170    |         |   |   | 146,898 |        
|                                             |                                                     |                 |         |        |                  |                    |         |            |   |   |            |        
|                                             | Gross profit                                        |                 |         | 83,829 |                  |                    |         | 86,864     |   |   |            | 169,261 |   |   |         | 157,480 |  
|Selling, general and administrative expenses |                                                     |                 | 62,647  |        |                  |                    | 74,992  |            |   |   | 129,423    |         |   |   | 129,734 |        
|Loss on extinguishment of debt               |                                                     |                 |        |        |                  |                    |        |            |   |   |           |         |   |   | (5,650  | )      
|                                             |                                                     |                 |         |        |                  |                    |         |            |   |   |            |        
|                                             | Operating income                                    |                 |         | 21,182 |                  |                    |         | 11,872     |   |   |            | 39,838  |   |   |         | 22,096  |  
|Interest expense                             |                                                     |                 | 10,257  |        |                  |                    | 16,455  |            |   |   | 28,940     |         |   |   | 26,026  |        
|Other expense                                |                                                     |                 |        |        |                  |                    |        |            |   |   |           |         |   |   | 2,783   |        
|                                             |                                                     |                 |         |        |                  |                    |         |            |   |   |            |        
|                                             | Income (loss) before income taxes                   |                 |         | 10,925 |                  |                    |         | (4,583     | ) |   |            | 10,898  |   |   |         | (6,713  | )
|                                             | Benefit (provision) for income taxes                |                 |         | (4,459 | )                |                    |         |           |   |   |            | (132    | ) |   |         | 1,171   |  
|                                             |                                                     |                 |         |        |                  |                    |         |            |   |   |            |        
|                                             | Net income (loss)                                   |                 |         | 6,466  |                  |                    |         | (4,583     | ) |   |            | 10,766  |   |   |         | (5,542  | )
|Preferred dividends                          |                                                     |                 |        |        |                  |                    | (700    | )          |   |   | (1,200     | )       |   |   | (1,200  | )      
|                                             |                                                     |                 |         |        |                  |                    |         |            |   |   |            |        
|                                             | Net income (loss) applicable to common stockholders |                 | $       | 6,466  |                  |                    | $       | (5,283     | ) |   | $          | 9,566   |   |   | $       | (6,742  | )
|                                             |                                                     |                 |         |        |                  |                    |         |            |   |   |            |        



31



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AMERICAN ACHIEVEMENT CORPORATION


CONSOLIDATED STATEMENTS OF CASH FLOWS


(Dollars in thousands)





|                                                        |                                                                                                        |                                                           |                                                                         |        |                  |                    |       |            |          |         |            |         |         |        |        |          |         |        |  
|------------------------------------------------------- | ------------------------------------------------------------------------------------------------------ | --------------------------------------------------------- | ----------------------------------------------------------------------- | ------ | ---------------- | ------------------ | ----- | ---------- | -------- | ------- | ---------- | ------- | ------- | ------ | ------ | -------- | ------- | ------ | -
|                                                        |                                                                                                        | (Successor)                                               |                                                                         |        | (Predecessor)    |                   
|                                                        |                                                                                                        |                                                           |                                                                         |        |                  |                   
|                                                        |                                                                                                        |                                                           |                                                                         |        |                  | For the Year Ended |      
|                                                        |                                                                                                        | For the Period                                            |                                                                         |        | For the Period   |                    |       |            |         
|                                                        |                                                                                                        | March 26, 2004-                                           |                                                                         |        | August 31, 2003- |                    |       | August 30, |          |         | August 31, |        
|                                                        |                                                                                                        | August 28, 2004                                           |                                                                         |        | March 25, 2004   |                    |       | 2003       |          |         | 2002       |        
|                                                        |                                                                                                        |                                                           |                                                                         |        |                  |                    |       |            |          |         |            |        
|CASH FLOWS FROM OPERATING ACTIVITIES:                   |                                                                                                        |                                                           |                                                                         |        |                  |                    |       |            |          |         |            |         |         |        |        |         
|                                                        | Net income (loss)                                                                                      |                                                           | $                                                                       | 6,466  |                  |                    | $     | (4,583     | )        |         | $          | 10,766  |         |        | $      | (5,542   | )      
|                                                        | Adjustments to reconcile net income (loss) to net cash provided
    by (used in) operating activities: |                                                           |                                                                         |        |                  |                    |       |            |          |         |            |         |         |        |        |          |        
|                                                        |                                                                                                        | Depreciation and amortization                             |                                                                         |        | 10,344           |                    |       |            | 8,530    |         |            |         | 14,149  |        |        |          | 19,712  |       
|                                                        |                                                                                                        | Deferred income taxes                                     |                                                                         |        | 4,309            |                    |       |            |         |         |            |         |        |        |        |          |        |       
|                                                        |                                                                                                        | Loss on extinguishment of debt                            |                                                                         |        |                 |                    |       |            |         |         |            |         |        |        |        |          | 5,650   |       
|                                                        |                                                                                                        | Amortization of debt discount and deferred financing fees |                                                                         |        | 629              |                    |       |            | 1,197    |         |            |         | 2,051   |        |        |          | 1,355   |       
|                                                        |                                                                                                        | Unrealized loss on free-standing derivative               |                                                                         |        |                 |                    |       |            |         |         |            |         |        |        |        |          | 182     |       
|                                                        |                                                                                                        | Provision for doubtful accounts                           |                                                                         |        | (236             | )                  |       |            | (144     | )       |            |         | (376    | )      |        |          | 145     |       
|                                                        |                                                                                                        | Changes in assets and liabilities:                        |                                                                         |        |                  |                    |       |            |          |         |            |         |         |        |        |          |         |       
|                                                        |                                                                                                        |                                                           | Accounts receivable                                                     |        |                  | (1,506             | )     |            |          | 2,758   |            |         |         | 2,469  |        |          |         | 3,582  |  
|                                                        |                                                                                                        |                                                           | Inventories, net                                                        |        |                  | 26,266             |       |            |          | (18,963 | )          |         |         | 2,117  |        |          |         | 1,380  |  
|                                                        |                                                                                                        |                                                           | Income tax receivable                                                   |        |                  |                   |       |            |          |        |            |         |         | 738    |        |          |         | 38     |  
|                                                        |                                                                                                        |                                                           | Prepaid expenses and other current assets, net                          |        |                  | (16,262            | )     |            |          | 2,573   |            |         |         | (2,296 | )      |          |         | (5,057 | )
|                                                        |                                                                                                        |                                                           | Other assets                                                            |        |                  | 810                |       |            |          | (959    | )          |         |         | (1,043 | )      |          |         | (739   | )
|                                                        |                                                                                                        |                                                           | Deferred revenue                                                        |        |                  | 2,615              |       |            |          | (2,235  | )          |         |         | (1,392 | )      |          |         | (284   | )
|                                                        |                                                                                                        |                                                           | Accounts payable, accrued expenses, and other long-term
    liabilities |        |                  | (36,862            | )     |            |          | 52,053  |            |         |         | (685   | )      |          |         | 2,888  |  
|                                                        |                                                                                                        |                                                           |                                                                         |        |                  |                    |       |            |          |         |            |        
|                                                        | Net cash provided by (used in) operating activities                                                    |                                                           |                                                                         | (3,427 | )                |                    |       | 40,227     |          |         |            | 26,498  |         |        |        | 23,310   |        
|                                                        |                                                                                                        |                                                           |                                                                         |        |                  |                    |       |            |          |         |            |        
|CASH FLOWS FROM INVESTING ACTIVITIES:                   |                                                                                                        |                                                           |                                                                         |        |                  |                    |       |            |          |         |            |         |         |        |        |         
|                                                        | Purchases of property, plant and equipment                                                             |                                                           |                                                                         | (3,665 | )                |                    |       | (12,793    | )        |         |            | (11,243 | )       |        |        | (14,247  | )      
|                                                        | Proceeds from sale of property, plant and equipment                                                    |                                                           |                                                                         |       |                  |                    |       |           |          |         |            |        |         |        |        | 673      |        
|                                                        | Acquisitions of businesses, net of cash acquired                                                       |                                                           |                                                                         |       |                  |                    |       | (109,406   | )        |         |            |        |         |        |        | (15,502  | )      
|                                                        |                                                                                                        |                                                           |                                                                         |        |                  |                    |       |            |          |         |            |        
|                                                        |                                                                                                        | Net cash used in investing activities                     |                                                                         |        | (3,665           | )                  |       |            | (122,199 | )       |            |         | (11,243 | )      |        |          | (29,076 | )     
|                                                        |                                                                                                        |                                                           |                                                                         |        |                  |                    |       |            |          |         |            |        
|CASH FLOWS FROM FINANCING ACTIVITIES:                   |                                                                                                        |                                                           |                                                                         |        |                  |                    |       |            |          |         |            |         |         |        |        |         
|                                                        | Proceeds from revolver                                                                                 |                                                           |                                                                         |       |                  |                    |       | 4,000      |          |         |            | 47,500  |         |        |        | 56,905   |        
|                                                        | Payments on revolver                                                                                   |                                                           |                                                                         |       |                  |                    |       | (13,500    | )        |         |            | (63,175 | )       |        |        | (65,589  | )      
|                                                        | Proceeds of common stock issuance                                                                      |                                                           |                                                                         |       |                  |                    |       | 102,046    |          |         |            | 40      |         |        |        |         |        
|                                                        | Proceeds from term loan                                                                                |                                                           |                                                                         | (387   | )                |                    |       | 155,000    |          |         |            |        |         |        |        |         |        
|                                                        | Proceeds from 8.25% senior subordinated notes                                                          |                                                           |                                                                         |       |                  |                    |       | 150,000    |          |         |            |        |         |        |        |         |        
|                                                        | Proceeds from credit facility revolver                                                                 |                                                           |                                                                         | 5,000  |                  |                    |       | 2,000      |          |         |            |        |         |        |        |         |        
|                                                        | Payments on credit facility revolver                                                                   |                                                           |                                                                         | (7,000 | )                |                    |       |           |          |         |            |        |         |        |        |         |        
|                                                        | Redemption of common and preferred stock                                                               |                                                           |                                                                         |       |                  |                    |       | (95,368    | )        |         |            |        |         |        |        |         |        
|                                                        | Redemption of 11% senior subordinated notes                                                            |                                                           |                                                                         |       |                  |                    |       | (41,355    | )        |         |            |        |         |        |        |         |        
|                                                        | Redemption of
    115/8% senior
    unsecured notes                                                    |                                                           |                                                                         |       |                  |                    |       | (170,925   | )        |         |            |        |         |        |        |         |        
|                                                        | Payments on term loan facility                                                                         |                                                           |                                                                         |       |                  |                    |       |           |          |         |            |        |         |        |        | (121,400 | )      
|                                                        | Proceeds from debt issuance, net of costs                                                              |                                                           |                                                                         |       |                  |                    |       |           |          |         |            |        |         |        |        | 166,612  |        
|                                                        | Payment of bridge notes to affiliate                                                                   |                                                           |                                                                         |       |                  |                    |       |           |          |         |            |        |         |        |        | (28,383  | )      
|                                                        | Repayment of interest rate swaps                                                                       |                                                           |                                                                         |       |                  |                    |       |           |          |         |            |        |         |        |        | (3,279   | )      
|                                                        | Change in bank overdraft                                                                               |                                                           |                                                                         | 3,252  |                  |                    |       | (2,396     | )        |         |            | 553     |         |        |        | (174     | )      
|                                                        |                                                                                                        |                                                           |                                                                         |        |                  |                    |       |            |          |         |            |        
|                                                        |                                                                                                        | Net cash provided by (used in) financing activities       |                                                                         |        | 865              |                    |       |            | 89,502   |         |            |         | (15,082 | )      |        |          | 4,692   | )     
|                                                        |                                                                                                        |                                                           |                                                                         |        |                  |                    |       |            |          |         |            |        
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS    |                                                                                                        |                                                           | (6,227                                                                  | )      |                  |                    | 7,530 |            |          |         | 173        |         |         |        | (1,074 | )       
|CASH AND CASH EQUIVALENTS, beginning of period          |                                                                                                        |                                                           | 9,265                                                                   |        |                  |                    | 1,735 |            |          |         | 1,562      |         |         |        | 2,636  |         
|                                                        |                                                                                                        |                                                           |                                                                         |        |                  |                    |       |            |          |         |            |        
|CASH AND CASH EQUIVALENTS, end of period                |                                                                                                        | $                                                         | 3,038                                                                   |        |                  | $                  | 9,265 |            |          | $       | 1,735      |         |         | $      | 1,562  |         
|                                                        |                                                                                                        |                                                           |                                                                         |        |                  |                    |       |            |          |         |            |        
|SUPPLEMENTAL DISCLOSURE                                 |                                                                                                        |                                                           |                                                                         |        |                  |                    |       |            |          |         |            |         |         |        |        |         
|                                                        | Cash paid during the period for:                                                                       |                                                           |                                                                         |        |                  |                    |       |            |          |         |            |         |         |        |        |          |        
|                                                        |                                                                                                        | Interest                                                  |                                                                         | $      | 2,567            |                    |       | $          | 18,873   |         |            | $       | 26,790  |        |        | $        | 24,001  |       
|                                                        |                                                                                                        |                                                           |                                                                         |        |                  |                    |       |            |          |         |            |        
|                                                        |                                                                                                        | Income taxes                                              |                                                                         | $      | 88               |                    |       | $          | 178      |         |            | $       | 133     |        |        | $        | 802     |       
|                                                        |                                                                                                        |                                                           |                                                                         |        |                  |                    |       |            |          |         |            |        
|SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING ACTIVITIES |                                                                                                        |                                                           |                                                                         |        |                  |                    |       |            |          |         |            |         |         |        |        |         
|                                                        | Accrued preferred stock dividends                                                                      |                                                           | $                                                                       |       |                  |                    | $     | 700        |          |         | $          | 1,200   |         |        | $      | 1,200    |        
|                                                        |                                                                                                        |                                                           |                                                                         |        |                  |                    |       |            |          |         |            |        
|                                                        | Issuance of preferred stock in settlement of obligation                                                |                                                           | $                                                                       |       |                  |                    | $     |           |          |         | $          |        |         |        | $      | 550      |        
|                                                        |                                                                                                        |                                                           |                                                                         |        |                  |                    |       |            |          |         |            |        






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AMERICAN ACHIEVEMENT CORPORATION


CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY


(Dollars in thousands)





|                                                          |  |                 |            |   |              |   |     |            |  |  |               |             |  |             |    |   |        |   |         |           |  |   |        |   |  |   |         |   |  |   |         |  
|--------------------------------------------------------- |  | --------------- | ---------- | - | ------------ | - | --- | ---------- |  |  | ------------- | ----------- |  | ----------- | -- | - | ------ | - | ------- | --------- |  | - | ------ | - |  | - | ------- | - |  | - | ------- | -
|                                                          |  |                 |            |   |              |   |     |            |  |  |               | Accumulated |  |             |    |   |       
|                                                          |  |                 |            |   |              |   |     | Other      |  |  |               |             | 
|                                                          |  | Preferred Stock |            |   | Common Stock |   |     | Additional |  |  | Comprehensive |             |  | Accumulated |    |   |       
|                                                          |  |                 |            |   |              |   |     | Paid-in    |  |  | Income        |             |  | Earnings    |    |   |       
|                                                          |  | Shares          |            |   | Amount       |   |     | Shares     |  |  | Amount        |             |  | Capital     |    |   | (Loss) |   |         | (Deficit) |  |   | Total  |  
|                                                          |  |                 |            |   |              |   |     |            |  |  |               |             |  |             |    |   |        |   |         |           |  |   |        |  
|BALANCE, August 25, 2001 (Predecessor)                    |  |                 | 1,001,347  |   |              | $ | 10  |            |  |  | 809,351       |             |  | $           | 8  |   |        | $ | 94,760  |           |  | $ | (2,751 | ) |  | $ | (21,199 | ) |  | $ | 70,828  |  
|Comprehensive loss                                       |  |                 |            |   |              |   |     |            |  |  |               |             |  |             |    |   |        |   |         |           |  |   |        |   |  |   |         |   |  |   |         |  
|Net loss                                                  |  |                 |           |   |              |   |    |            |  |  |              |             |  |             |   |   |        |   |        |           |  |   |       |   |  |   | (5,542  | ) |  |   | (5,542  | )
|Adjustment to minimum pension liability                   |  |                 |           |   |              |   |    |            |  |  |              |             |  |             |   |   |        |   |        |           |  |   | (1,614 | ) |  |   |        |   |  |   | (1,614  | )
|Change in effective portion of derivative loss            |  |                 |           |   |              |   |    |            |  |  |              |             |  |             |   |   |        |   |        |           |  |   | (377   | ) |  |   |        |   |  |   | (377    | )
|Reclassification into earnings for derivative termination |  |                 |           |   |              |   |    |            |  |  |              |             |  |             |   |   |        |   |        |           |  |   | 2,609  |   |  |   |        |   |  |   | 2,609   |  
|                                                          |  |                 |            |   |              |   |     |            |  |  |               |             |  |             |    |   |        |   |         |           |  |   |        |  
|Total comprehensive income (loss)                         |  |                 |           |   |              |   |    |            |  |  |              |             |  |             |   |   |        |   |        |           |  |   | 618    |   |  |   | (5,542  | ) |  |   | (4,924  | )
|Accrued dividends on minority interest in CBI             |  |                 |           |   |              |   |    |            |  |  |              |             |  |             |   |   |        |   |        |           |  |   |       |   |  |   | (1,200  | ) |  |   | (1,200  | )
|Issuance of American Achievement Series A Preferred Stock |  |                 | 5,500      |   |              |   |    |            |  |  |              |             |  |             |   |   |        |   | 550     |           |  |   |       |   |  |   |        |   |  |   | 550     |  
|                                                          |  |                 |            |   |              |   |     |            |  |  |               |             |  |             |    |   |        |   |         |           |  |   |        |  
|BALANCE, August 31, 2002 (Predecessor)                    |  |                 | 1,006,847  |   |              | $ | 10  |            |  |  | 809,351       |             |  | $           | 8  |   |        | $ | 95,310  |           |  | $ | (2,133 | ) |  | $ | (27,941 | ) |  | $ | 65,254  |  
|                                                          |  |                 |            |   |              |   |     |            |  |  |               |             |  |             |    |   |        |   |         |           |  |   |        |  
|Comprehensive income                                     |  |                 |            |   |              |   |     |            |  |  |               |             |  |             |    |   |        |   |         |           |  |   |        |   |  |   |         |   |  |   |         |  
|Net income                                                |  |                 |           |   |              |   |    |            |  |  |              |             |  |             |   |   |        |   |        |           |  |   |       |   |  |   | 10,766  |   |  |   | 10,766  |  
|Adjustment to minimum pension liability                   |  |                 |           |   |              |   |    |            |  |  |              |             |  |             |   |   |        |   |        |           |  |   | (3,017 | ) |  |   |        |   |  |   | (3,017  | )
|                                                          |  |                 |            |   |              |   |     |            |  |  |               |             |  |             |    |   |        |   |         |           |  |   |        |  
|Total comprehensive income (loss)                         |  |                 |           |   |              |   |    |            |  |  |              |             |  |             |   |   |        |   |        |           |  |   | (3,017 | ) |  |   | 10,766  |   |  |   | 7,749   |  
|Accrued dividends on minority interest in CBI             |  |                 |           |   |              |   |    |            |  |  |              |             |  |             |   |   |        |   |        |           |  |   |       |   |  |   | (1,200  | ) |  |   | (1,200  | )
|Issuance of stock                                         |  |                 | 519        |   |              |   |    |            |  |  | 424           |             |  |             |   |   |        |   | 40      |           |  |   |       |   |  |   |        |   |  |   | 40      |  
|                                                          |  |                 |            |   |              |   |     |            |  |  |               |             |  |             |    |   |        |   |         |           |  |   |        |  
|BALANCE, August 30, 2003 (Predecessor)                    |  |                 | 1,007,366  |   |              | $ | 10  |            |  |  | 809,775       |             |  | $           | 8  |   |        | $ | 95,350  |           |  | $ | (5,150 | ) |  | $ | (18,375 | ) |  | $ | 71,843  |  
|                                                          |  |                 |            |   |              |   |     |            |  |  |               |             |  |             |    |   |        |   |         |           |  |   |        |  
|Comprehensive loss                                       |  |                 |            |   |              |   |     |            |  |  |               |             |  |             |    |   |        |   |         |           |  |   |        |   |  |   |         |   |  |   |         |  
|Net loss                                                  |  |                 |           |   |              |   |    |            |  |  |              |             |  |             |   |   |        |   |        |           |  |   |       |   |  |   | (4,583  | ) |  |   | (4,583  | )
|Adjustment to minimum pension liability                   |  |                 |           |   |              |   |    |            |  |  |              |             |  |             |   |   |        |   |        |           |  |   | 40     |   |  |   |        |   |  |   | 40      |  
|                                                          |  |                 |            |   |              |   |     |            |  |  |               |             |  |             |    |   |        |   |         |           |  |   |        |  
|Total comprehensive loss                                  |  |                 |           |   |              |   |    |            |  |  |              |             |  |             |   |   |        |   |        |           |  |   | 40     |   |  |   | (4,583  | ) |  |   | (4,543  | )
|Accrued dividends on minority interest in CBI             |  |                 |           |   |              |   |    |            |  |  |              |             |  |             |   |   |        |   |        |           |  |   |       |   |  |   | (700    | ) |  |   | (700    | )
|Repurchase of common and preferred stock                  |  |                 | (1,007,366 | ) |              |   | (10 | )          |  |  | (809,775      | )           |  |             | (8 | ) |        |   | (95,350 | )         |  |   |       |   |  |   |        |   |  |   | (95,368 | )
|Issuance of common stock                                  |  |                 |            |   |              |   |     |            |  |  | 100           |             |  |             |    |   |        |   | 102,046 |           |  |   |       |   |  |   |        |   |  |   | 102,046 |  
|Effect of purchase accounting                             |  |                 |           |   |              |   |    |            |  |  |              |             |  |             |   |   |        |   |        |           |  |   | 5,110  |   |  |   | 23,658  |   |  |   | 28,768  |  
|                                                          |  |                 |            |   |              |   |     |            |  |  |               |             |  |             |    |   |        |   |         |           |  |   |        |  
|BALANCE, March 25, 2004 (Predecessor)                     |  |                 |           |   |              | $ |    |            |  |  | 100           |             |  | $           |    |   |        | $ | 102,046 |           |  | $ |       |   |  | $ |        |   |  | $ | 102,046 |  
|                                                         
|Net income                                                |  |                 |           |   |              |   |    |            |  |  |              |             |  |             |   |   |        |   |        |           |  |   |       |   |  | $ | 6,466   |   |  | $ | 6,466   |  
|                                                          |  |                 |            |   |              |   |     |            |  |  |               |             |  |             |    |   |        |   |         |           |  |   |        |  
|BALANCE, August 28, 2004 (Successor)                      |  |                 |           |   |              | $ |    |            |  |  | 100           |             |  | $           |    |   |        | $ | 102,046 |           |  | $ |       |   |  | $ | 6,466   |   |  | $ | 108,512 |  
|                                                          |  |                 |            |   |              |   |     |            |  |  |               |             |  |             |    |   |        |   |         |           |  |   |        |  






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AMERICAN ACHIEVEMENT CORPORATION


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(Dollars in thousands)




|   |                                                                
|-- | ---------------------------------------------------------------
|1. | Summary of Organization and Significant Accounting
    Policies









BASIS OF PRESENTATION AND COMPARABILITY










FISCAL YEAR-END




CONSOLIDATION




1 4


CHANGE IN ACCOUNTING PRINCIPLE




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AMERICAN ACHIEVEMENT CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


CASH AND CASH EQUIVALENTS




ALLOWANCE FOR DOUBTFUL ACCOUNTS






|                                                    |  |           |       |  |            |   |       |       |  |   |            |            |  |        |        |   |  |   |       | 
|--------------------------------------------------- |  | --------- | ----- |  | ---------- | - | ----- | ----- |  | - | ---------- | ---------- |  | ------ | ------ | - |  | - | ----- | 
|                                                    |  | Balance   |       |  |            |   |       |       |  |   |           
|                                                    |  | at        |       |  | Charged to |   |       |       |  |   |            | Balance at | 
|                                                    |  | Beginning |       |  | Costs and  |   |       |       |  |   |            | End of     | 
|                                                    |  | of Period |       |  | Expenses   |   |       | Other |  |   | Write-offs |            |  | Period |       
|                                                    |  |           |       |  |            |   |       |       |  |   |            |            |  |        |       
|Allowance for doubtful accounts and product returns |  |           |       |  |            |   |       |       |  |   |            |            |  |        |        |   |  |   |       | 
|March 26, 2004  August 28, 2004                    |  | $         | 3,098 |  |            | $ | 3,790 |       |  | $ | 123        |            |  | $      | (4,150 | ) |  | $ | 2,861 | 
|                                                    |  |           |       |  |            |   |       |       |  |   |            |            |  |        |       
|                                                   
|August 31, 2003  March 25, 2004                    |  |           | 3,242 |  |            |   | 3,445 |       |  |   | (160       | )          |  |        | (3,429 | ) |  |   | 3,098 | 
|Year ended August 30, 2003                          |  |           | 3,525 |  |            |   | 7,178 |       |  |   | 145        |            |  |        | (7,606 | ) |  |   | 3,242 | 
|Year ended August 31, 2002                          |  |           | 3,076 |  |            |   | 8,955 |       |  |   | 38         |            |  |        | (8,544 | ) |  |   | 3,525 | 

INVENTORIES




SALES REPRESENTATIVE ADVANCES AND RELATED RESERVE






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AMERICAN ACHIEVEMENT CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                         |  |           |       |  |            |   |       |               |  |            |        |   |  |   |       | 
|---------------------------------------- |  | --------- | ----- |  | ---------- | - | ----- | ------------- |  | ---------- | ------ | - |  | - | ----- | 
|                                         |  | Balance   |       |  |            |   |       |               | 
|                                         |  | at        |       |  | Charged to |   |       |               |  | Balance at |       
|                                         |  | Beginning |       |  | Costs and  |   |       |               |  | End of     |       
|                                         |  | of Period |       |  | Expenses   |   |       | Write-offs(1) |  |            | Period |  
|                                         |  |           |       |  |            |   |       |               |  |            |        |  
|Reserve on sales representative advances |  |           |       |  |            |   |       |               |  |            |        |   |  |   |       | 
|March 26, 2004  August 28, 2004         |  | $         | 2,254 |  |            | $ | 1,205 |               |  | $          | (1,076 | ) |  | $ | 2,383 | 
|                                         |  |           |       |  |            |   |       |               |  |            |        |  
|                                        
|August 31, 2003  March 25, 2004         |  |           | 2,516 |  |            |   | 813   |               |  |            | (1,075 | ) |  |   | 2,254 | 
|Year ended August 30, 2003               |  |           | 2,843 |  |            |   | 2,335 |               |  |            | (2,662 | ) |  |   | 2,516 | 
|Year ended August 31, 2002               |  |           | 3,004 |  |            |   | 2,499 |               |  |            | (2,660 | ) |  |   | 2,843 | 






|    |                                                                                                                           
|--- | --------------------------------------------------------------------------------------------------------------------------
|(1) | Represents principally write-offs of terminated sales
    representative amounts and forgiveness of amounts by the Company

PROPERTY, PLANT AND EQUIPMENT










|                           |  |               
|-------------------------- |  | --------------
|Description                |  | Useful Life   
|                           |  |               
|Buildings and improvements |  | 10 to 25 years
|Tools and dies             |  | 8 years       
|Machinery and equipment    |  | 2 to 10 years 
|Leasehold improvements     |  | Term of lease 

GOODWILL AND OTHER INTANGIBLE ASSETS




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AMERICAN ACHIEVEMENT CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                           |                             |                 |       |   |                  |         |        |            |         |   |            |   |  |   |        |       | 
|-------------------------- | --------------------------- | --------------- | ----- | - | ---------------- | ------- | ------ | ---------- | ------- | - | ---------- | - |  | - | ------ | ----- | 
|                           |                             |                 |       |   |                  | For the |        |            | For the |  
|                           |                             | For the Period  |       |   | For the Period   |         |        | Year Ended |         |   | Year Ended |  
|                           |                             |                 |       |   |                  |         |        |            |         |   |            |  
|                           |                             | March 26, 2004- |       |   | August 31, 2003- |         |        | August 30, |         |   | August 31, |  
|                           |                             | August 28, 2004 |       |   | March 25, 2004   |         |        | 2003       |         |   | 2002       |  
|                           |                             |                 |       |   |                  |         |        |            |         |   |            |  
|Reported net income (loss) |                             | $               | 6,466 |   |                  | $       | (4,583 | )          |         | $ | 10,766     |   |  | $ | (5,542 | )    
|                           | Add: goodwill amortization  |                 |       |  |                  |         |        |           |         |   |            |  |  |   |        | 4,013 | 
|                           | Add: trademark amortization |                 |       |  |                  |         |        |           |         |   |            |  |  |   |        | 1,544 | 
|                           |                             |                 |       |   |                  |         |        |            |         |   |            |  
|Pro forma net income       |                             | $               | 6,466 |   |                  | $       | (4,583 | )          |         | $ | 10,766     |   |  | $ | 15     |      
|                           |                             |                 |       |   |                  |         |        |            |         |   |            |  

IMPAIRMENT OF LONG-LIVED ASSETS




CUSTOMER DEPOSITS




INCOME TAXES




FAIR VALUE OF FINANCIAL INSTRUMENTS




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AMERICAN ACHIEVEMENT CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




DERIVATIVE FINANCIAL INSTRUMENTS














STOCK-BASED COMPENSATION












|                                                             |  |                  |        |   |              |   |        |              |  |   |        |  
|------------------------------------------------------------ |  | ---------------- | ------ | - | ------------ | - | ------ | ------------ |  | - | ------ | -
|                                                             |  | (Predecessor)    |       
|                                                             |  |                  |       
|                                                             |  | For the Period   |        |   | For the Year |   |        | For the Year | 
|                                                             |  | August 31, 2003- |        |   | Ended        |   |        | Ended        | 
|                                                             |  | March 25,        |        |   | August 30,   |   |        | August 31,   | 
|                                                             |  | 2004             |        |   | 2003         |   |        | 2002         | 
|                                                             |  |                  |        |   |              |   |        |              | 
|Net income (loss)                                            |  | $                | (4,583 | ) |              | $ | 10,766 |              |  | $ | (5,542 | )
|Less: stock-based compensation expense, net of related taxes |  |                  | 11     |   |              |   | 30     |              |  |   | 8      |  
|                                                             |  |                  |        |   |              |   |        |              | 
|Net income (loss)  pro forma                                |  | $                | (4,594 | ) |              | $ | 10,736 |              |  | $ | (5,550 | )
|                                                             |  |                  |        |   |              |   |        |              | 



38



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AMERICAN ACHIEVEMENT CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)










|                        |  |                |          |              |            |  |              |            |  |  |          | 
|----------------------- |  | -------------- | -------- | ------------ | ---------- |  | ------------ | ---------- |  |  | -------- | 
|                        |  |                |          | For the Year |            |  | For the Year |           
|                        |  | For the Period |          |              | Ended      |  |              | Ended      | 
|                        |  | March 25,      |          |              | August 30, |  |              | August 31, | 
|                        |  | 2004           |          |              | 2003       |  |              | 2002       | 
|                        |  |                |          |              |            |  |              |            | 
|Risk-free interest rate |  |                | 3.93%    |              |            |  | 3.93%        |            |  |  | 4.88%    | 
|Expected life           |  |                | 10 years |              |            |  | 10 years     |            |  |  | 10 years | 
|Volatility              |  |                | 25%      |              |            |  | 25%          |            |  |  | 28%      | 
|Dividend yield          |  |                |         |              |            |  |             |            |  |  |         | 

REVENUE RECOGNITION AND WARRANTY COSTS


















|                                 |  |            |       |            |            |   |       |        |  |                |           |   |  |   |       | 
|-------------------------------- |  | ---------- | ----- | ---------- | ---------- | - | ----- | ------ |  | -------------- | --------- | - |  | - | ----- | 
|                                 |  |            |       | Charged to |            |   |       |        | 
|                                 |  | Balance at |       |            | Costs and  |   |       |        |  |               
|                                 |  | Beginning  |       |            | Expenses   |   |       |        |  | Balance at End |          
|                                 |  | of Period  |       |            | (accruals) |   |       | Claims |  |                | of Period |  
|                                 |  |            |       |            |            |   |       |        |  |                |           |  
|Accrued ring repair liability    |  |            |       |            |            |   |       |        |  |                |           |   |  |   |       | 
|March 26, 2004  August 28, 2004 |  | $          | 1,500 |            |            | $ | 347   |        |  | $              | (637      | ) |  | $ | 1,210 | 
|                                 |  |            |       |            |            |   |       |        |  |                |           |  
|                                
|August 31, 2003  March 25, 2004 |  |            | 1,500 |            |            |   | 461   |        |  |                | (461      | ) |  |   | 1,500 | 
|Year ended August 30, 2003       |  |            | 1,520 |            |            |   | 706   |        |  |                | (726      | ) |  |   | 1,500 | 
|Year ended August 31, 2002       |  |            | 1,520 |            |            |   | 1,208 |        |  |                | (1,208    | ) |  |   | 1,520 | 

SEASONALITY




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AMERICAN ACHIEVEMENT CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)












CONCENTRATION OF CREDIT RISK




SHIPPING AND HANDLING FEES




SUPPLIER CONCENTRATION




ADVERTISING






USE OF ESTIMATES




RECLASSIFICATIONS




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AMERICAN ACHIEVEMENT CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


RECENT ACCOUNTING PRONOUNCEMENTS














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##### Table of Contents



AMERICAN ACHIEVEMENT CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






Consolidation of
Variable Interest Entities.






|   |       
|-- | ------
|2. | Merger



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AMERICAN ACHIEVEMENT CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)










Business Combinations, Push
Down Basis of Accounting Required in Certain Limited
Circumstances,







|                                               |                     |  |          |   |  |   |         |        | 
|---------------------------------------------- | ------------------- |  | -------- | - |  | - | ------- | ------ | 
|Purchase price                                 |                     |  |          |   |  | $ | 419,200 |       
|Assets acquired                                |                     |  | 197,714  |   |  |   |         |       
|Liabilities assumed                            |                     |  | (125,731 | ) |  |   |         |       
|                                               |                     |  |          |   |  |  
|                                               | Net assets acquired |  |          |   |  |   |         | 71,983 | 
|                                               |                     |  |          |   |  |  
|Excess purchase price over net assets acquired |                     |  |          |   |  | $ | 347,217 |       
|                                               |                     |  |          |   |  |  

















|                              |                      |   |          |         | 
|----------------------------- | -------------------- | - | -------- | ------- | 
|Current assets                |                      | $ | 123,407  |        
|Property, plant and equipment |                      |   | 78,301   |        
|Goodwill                      |                      |   | 181,361  |        
|Intangible assets             |                      |   | 157,928  |        
|Other assets                  |                      |   | 15,390   |        
|Current liabilities           |                      |   | (116,102 | )      
|Deferred income taxes         |                      |   | (12,043  | )      
|Other long-term liabilities   |                      |   | (9,042   | )      
|                              |                      |   |         
|                              | Total purchase price |   | $        | 419,200 | 
|                              |                      |   |         




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AMERICAN ACHIEVEMENT CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|   |                            
|-- | ---------------------------
|3. | Comprehensive Income (Loss)






|                                                      |  |                 |       |  |  |                  |   |        |               |  |   |               |   |  |   |        |  
|----------------------------------------------------- |  | --------------- | ----- |  |  | ---------------- | - | ------ | ------------- |  | - | ------------- | - |  | - | ------ | -
|                                                      |  | (Successor)     |       |  |  | (Predecessor)    |   |        | (Predecessor) |  |   | (Predecessor) |  
|                                                      |  |                 |       |  |  |                  |   |        |               |  |   |               |  
|                                                      |  | For the Period  |       |  |  | For the Period   |   |        | For the Year  |  |   | For the Year  |  
|                                                      |  | March 26, 2004- |       |  |  | August 31, 2003- |   |        | Ended         |  |   | Ended         |  
|                                                      |  | August 28,      |       |  |  | March 25,        |   |        | August 30,    |  |   | August 31,    |  
|                                                      |  | 2004            |       |  |  | 2004             |   |        | 2003          |  |   | 2002          |  
|                                                      |  |                 |       |  |  |                  |   |        |               |  |   |               |  
|Net income (loss)                                     |  | $               | 6,466 |  |  |                  | $ | (4,583 | )             |  | $ | 10,766        |   |  | $ | (5,542 | )
|Reclass into earnings for derivative reclassification |  |                 |      |  |  |                  |   |       |               |  |   |              |   |  |   | (377   | )
|Reclass into earnings for derivative termination      |  |                 |      |  |  |                  |   |       |               |  |   |              |   |  |   | 2,609  |  
|Adjustment in minimum pension liability               |  |                 |      |  |  |                  |   | 40     |               |  |   | (3,017        | ) |  |   | (1,614 | )
|                                                      |  |                 |       |  |  |                  |   |        |               |  |   |               |  
|Total comprehensive income (loss)                     |  | $               | 6,466 |  |  |                  | $ | (4,543 | )             |  | $ | 7,749         |   |  | $ | (4,924 | )
|                                                      |  |                 |       |  |  |                  |   |        |               |  |   |               |  
















|   |                         
|-- | ------------------------
|4. | Significant Acquisitions



44



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AMERICAN ACHIEVEMENT CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                              |  |   |        |  
|----------------------------- |  | - | ------ | -
|Working capital deficit       |  | $ | (2,413 | )
|Property, plant and equipment |  |   | 113    |  
|Other intangibles             |  |   | 2,500  |  
|Goodwill                      |  |   | 16,047 |  
|Other long-term assets        |  |   | 28     |  
|                              |  |   |       
|                              |  | $ | 16,275 |  
|                              |  |   |       





|                                                    |  |             |         |  
|--------------------------------------------------- |  | ----------- | ------- | -
|                                                    |  | August 31,  |        
|                                                    |  | 2002        |        
|                                                    |  |             |        
|                                                    |  | (Unaudited) |        
|Net sales                                           |  | $           | 310,275 |  
|Operating income (loss)                             |  |             | (8,273  | )
|Net income (loss) applicable to common stockholders |  |             | (9,473  | )





|   |                 
|-- | ----------------
|5. | Inventories, Net



|                |  |             |        |   |  |               |   |        |  
|--------------- |  | ----------- | ------ | - |  | ------------- | - | ------ | -
|                |  | (Successor) |        |   |  | (Predecessor) |  
|                |  |             |        |   |  |               |  
|                |  | August 28,  |        |   |  | August 30,    |  
|                |  | 2004        |        |   |  | 2003          |  
|                |  |             |        |   |  |               |  
|Raw materials   |  | $           | 8,853  |   |  |               | $ | 7,876  |  
|Work in process |  |             | 7,380  |   |  |               |   | 8,043  |  
|Finished goods  |  |             | 6,978  |   |  |               |   | 7,632  |  
|Less  Reserves |  |             | (188   | ) |  |               |   | (241   | )
|                |  |             |        |   |  |               |  
|                |  | $           | 23,023 |   |  |               | $ | 23,310 |  
|                |  |             |        |   |  |               |  



45



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AMERICAN ACHIEVEMENT CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|   |                                               
|-- | ----------------------------------------------
|6. | Prepaid Expenses and Other Current Assets, Net



|                                                |  |             |        |   |  |               |   |        |  
|----------------------------------------------- |  | ----------- | ------ | - |  | ------------- | - | ------ | -
|                                                |  | (Successor) |        |   |  | (Predecessor) |  
|                                                |  |             |        |   |  |               |  
|                                                |  | August 28,  |        |   |  | August 30,    |  
|                                                |  | 2004        |        |   |  | 2003          |  
|                                                |  |             |        |   |  |               |  
|Sales representative advances                   |  | $           | 12,247 |   |  |               | $ | 10,350 |  
|Less  reserve on sales representative advances |  |             | (2,383 | ) |  |               |   | (2,516 | )
|Deferred publication and ring costs             |  |             | 7,174  |   |  |               |   | 8,376  |  
|Prepaid advertising and promotional materials   |  |             | 5,276  |   |  |               |   | 2,580  |  
|Other                                           |  |             | 3,916  |   |  |               |   | 5,149  |  
|                                                |  |             |        |   |  |               |  
|                                                |  | $           | 26,230 |   |  |               | $ | 23,939 |  
|                                                |  |             |        |   |  |               |  





|   |                                   
|-- | ----------------------------------
|7. | Property, Plant and Equipment, Net



|                                   |       |             |        |        |  |               |   |         |         | 
|---------------------------------- | ----- | ----------- | ------ | ------ |  | ------------- | - | ------- | ------- | 
|                                   |       | (Successor) |        |        |  | (Predecessor) |  
|                                   |       |             |        |        |  |               |  
|                                   |       | August 28,  |        |        |  | August 30,    |  
|                                   |       | 2004        |        |        |  | 2003          |  
|                                   |       |             |        |        |  |               |  
|Land                               |       | $           | 9,550  |        |  |               | $ | 6,097   |        
|Buildings and improvements         |       |             | 7,752  |        |  |               |   | 12,725  |        
|Tools and dies                     |       |             | 20,216 |        |  |               |   | 30,895  |        
|Machinery and equipment            |       |             | 40,091 |        |  |               |   | 58,649  |        
|Construction in progress           |       |             | 4,357  |        |  |               |   | 3,256   |        
|                                   |       |             |        |        |  |               |  
|                                   | Total |             |        | 81,966 |  |               |   |         | 111,622 | 
|Less  accumulated depreciation    |       |             | (5,401 | )      |  |               |   | (46,315 | )      
|                                   |       |             |        |        |  |               |  
|Property, plant and equipment, net |       | $           | 76,565 |        |  |               | $ | 65,307  |        
|                                   |       |             |        |        |  |               |  

46



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AMERICAN ACHIEVEMENT CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|   |                                     
|-- | ------------------------------------
|8. | Goodwill and Other Intangible Assets



| |         
| | --------
| | Goodwill














|                               |                                     |                                   |        |       |                                   |   |            |          |  |             |              |       |  |       |        |     |       |   |        |            |  |   |             |        |  |          |        |     |              |   |        |       |  |   |        |    |  |   |        |     |  |   |        |     |  |   |         |       | 
|------------------------------ | ----------------------------------- | --------------------------------- | ------ | ----- | --------------------------------- | - | ---------- | -------- |  | ----------- | ------------ | ----- |  | ----- | ------ | --- | ----- | - | ------ | ---------- |  | - | ----------- | ------ |  | -------- | ------ | --- | ------------ | - | ------ | ----- |  | - | ------ | -- |  | - | ------ | --- |  | - | ------ | --- |  | - | ------- | ----- | 
|                               |                                     | (Successor)                       |        |       | (Predecessor)                     |  
|                               |                                     |                                   |        |       |                                   |  
|                               |                                     | March 26, 2004 to August 28, 2004 |        |       | August 31, 2003 to March 25, 2004 |  
|                               |                                     |                                   |        |       |                                   |  
|                               |                                     | Class                             |        |       |                                   |   | Graduation |          |  | Achievement |              |       |  |       | Class  |     |       |   |        | Graduation |  |   | Achievement |        |  |         
|                               |                                     | Rings                             |        |       | Yearbooks                         |   |            | Products |  |             | Publications |       |  | Other |        |     | Total |   |        | Rings      |  |   | Yearbooks   |        |  | Products |        |     | Publications |   |        | Other |  |   | Total  |   
|                               |                                     |                                   |        |       |                                   |   |            |          |  |             |              |       |  |       |        |     |       |   |        |            |  |   |             |        |  |          |        |     |              |   |        |       |  |   |        |   
|Balance at beginning of period |                                     | $                                 | 65,780 |       |                                   | $ | 60,610     |          |  | $           | 17,915       |       |  | $     | 10,576 |     |       | $ | 11,563 |            |  | $ | 166,444     |        |  | $        | 65,630 |     |              | $ | 57,420 |       |  | $ | 17,862 |    |  | $ | 10,297 |     |  | $ | 10,850 |     |  | $ | 162,059 |      
|                               | Goodwill acquired during the period |                                   |        |      |                                   |   |            |         |  |             |              |      |  |       |        |    |       |   |        |           |  |   | $           |       |  |          |        | 150 |              |   |        | 3,190 |  |   |        | 53 |  |   |        | 279 |  |   |        | 713 |  |   | $       | 4,385 | 
|                               | Purchase price adjustments          |                                   |        | 5,253 |                                   |   |            | 3,941    |  |             |              | 5,081 |  |       |        | 993 |       |   |        | 368        |  |   | $           | 15,636 |  |          |        |    |              |   |        |      |  |   |        |   |  |   |        |    |  |   |        |    |  |   | $       |      | 
|                               |                                     |                                   |        |       |                                   |   |            |          |  |             |              |       |  |       |        |     |       |   |        |            |  |   |             |        |  |          |        |     |              |   |        |       |  |   |        |   
|Balance at end of period       |                                     | $                                 | 71,033 |       |                                   | $ | 64,551     |          |  | $           | 22,996       |       |  | $     | 11,569 |     |       | $ | 11,931 |            |  | $ | 182,080     |        |  | $        | 65,780 |     |              | $ | 60,610 |       |  | $ | 17,915 |    |  | $ | 10,576 |     |  | $ | 11,563 |     |  | $ | 166,444 |      
|                               |                                     |                                   |        |       |                                   |   |            |          |  |             |              |       |  |       |        |     |       |   |        |            |  |   |             |        |  |          |        |     |              |   |        |       |  |   |        |   







|                               |                                                                                  |                 |        |            |           |   |             |          |  |   |              |    |  |       |        |     |       |   |        |     |  |   |         |       | 
|------------------------------ | -------------------------------------------------------------------------------- | --------------- | ------ | ---------- | --------- | - | ----------- | -------- |  | - | ------------ | -- |  | ----- | ------ | --- | ----- | - | ------ | --- |  | - | ------- | ----- | 
|                               |                                                                                  | (Predecessor)   |       
|                               |                                                                                  |                 |       
|                               |                                                                                  | August 30, 2003 |       
|                               |                                                                                  |                 |       
|                               |                                                                                  |                 |        | Graduation |           |   | Achievement |          |  |  
|Year Ended August 30, 2003     |                                                                                  | Class Rings     |        |            | Yearbooks |   |             | Products |  |   | Publications |    |  | Other |        |     | Total |  
|                               |                                                                                  |                 |        |            |           |   |             |          |  |   |              |    |  |       |        |     |       |  
|Balance at beginning of period |                                                                                  | $               | 65,536 |            |           | $ | 55,418      |          |  | $ | 17,829       |    |  | $     | 10,122 |     |       | $ | 10,403 |     |  | $ | 159,308 |      
|                               | Reclassification of workforce intangible due to the adoption of
    SFAS No. 142 |                 |        | 94         |           |   |             | 2,002    |  |   |              | 33 |  |       |        | 175 |       |   |        | 447 |  |   | $       | 2,751 | 
|                               | Purchase price adjustments                                                       |                 |        |           |           |   |             |         |  |   |              |   |  |       |        |    |       |   |        |    |  |   | $       |      | 
|                               |                                                                                  |                 |        |            |           |   |             |          |  |   |              |    |  |       |        |     |       |  
|Balance at end of period       |                                                                                  | $               | 65,630 |            |           | $ | 57,420      |          |  | $ | 17,862       |    |  | $     | 10,297 |     |       | $ | 10,850 |     |  | $ | 162,059 |      
|                               |                                                                                  |                 |        |            |           |   |             |          |  |   |              |    |  |       |        |     |       |  




47



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AMERICAN ACHIEVEMENT CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                        
| | -----------------------
| | Other Intangible Assets



|                                 |                                           |             |  |                 |       |   |         |              |  |   |           |        |   |   |         |        | 
|-------------------------------- | ----------------------------------------- | ----------- |  | --------------- | ----- | - | ------- | ------------ |  | - | --------- | ------ | - | - | ------- | ------ | 
|                                 |                                           | Estimated   |  |                 | Gross |   |         | Accumulated  |  |   |          
|                                 |                                           | Useful Life |  |                 | Asset |   |         | Amortization |  |   | Net Asset |       
|                                 |                                           |             |  |                 |       |   |         |              |  |   |           |       
|At August 28, 2004 (Successor)   |                                           |             |  |                 |       |   |         |              |  |   |           |        |   |   |         |       
|                                 | Trademarks                                |             |  | Indefinite      |       |   | $       | 50,095       |  |   | $         |       |   |   | $       | 50,095 | 
|                                 | Deferred financing costs and other        |             |  | 7 to 8 years    |       |   |         | 11,112       |  |   |           | (624   | ) |   |         | 10,488 | 
|                                 | Patents                                   |             |  | 14 to 17  years |       |   |         | 7,317        |  |   |           | (185   | ) |   |         | 7,132  | 
|                                 | Customer lists and distribution contracts |             |  | 3 to 12 years   |       |   |         | 100,516      |  |   |           | (4,758 | ) |   |         | 95,758 | 
|                                 |                                           |             |  |                 |       |   |         |              |  |   |           |       
|                                 |                                           |             |  |                 |       | $ | 169,040 |              |  | $ | (5,567    | )      |   | $ | 163,473 |       
|                                 |                                           |             |  |                 |       |   |         |              |  |   |           |       
|                                
|At August 30, 2003 (Predecessor) |                                           |             |  |                 |       |   |         |              |  |   |           |        |   |   |         |       
|                                 | Trademarks                                |             |  | Indefinite      |       |   | $       | 47,340       |  |   |           | (5,485 | ) |   | $       | 41,855 | 
|                                 | Deferred financing costs and other        |             |  | 1 to 7 years    |       |   |         | 10,344       |  |   |           | (3,286 | ) |   |         | 7,058  | 
|                                 | Customer lists and distribution contracts |             |  | 5 to 12 years   |       |   |         | 16,072       |  |   |           | (4,771 | ) |   |         | 11,301 | 
|                                 |                                           |             |  |                 |       |   |         |              |  |   |           |       
|                                 |                                           |             |  |                 |       | $ | 73,756  |              |  | $ | (13,542   | )      |   | $ | 60,214  |       
|                                 |                                           |             |  |                 |       |   |         |              |  |   |           |       





48



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##### Table of Contents



AMERICAN ACHIEVEMENT CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|   |                 
|-- | ----------------
|9. | Accrued Expenses



|                                                     |  |             |        |  |               |   |        | 
|---------------------------------------------------- |  | ----------- | ------ |  | ------------- | - | ------ | 
|                                                     |  | (Successor) |        |  | (Predecessor) |  
|                                                     |  |             |        |  |               |  
|                                                     |  | August 28,  |        |  | August 30,    |  
|                                                     |  | 2004        |        |  | 2003          |  
|                                                     |  |             |        |  |               |  
|Commissions and royalties                            |  | $           | 9,005  |  |               | $ | 8,397  | 
|Compensation and related costs                       |  |             | 7,744  |  |               |   | 7,456  | 
|Accumulated pension and postretirement benefit costs |  |             | 4,875  |  |               |   | 5,361  | 
|Accrued sales and property taxes                     |  |             | 1,795  |  |               |   | 1,493  | 
|Accrued workmans compensation and medical claims    |  |             | 1,751  |  |               |   | 1,249  | 
|Capital lease obligations, short term                |  |             | 1,230  |  |               |   | 520    | 
|Other                                                |  |             | 3,414  |  |               |   | 1,630  | 
|                                                     |  |             |        |  |               |  
|                                                     |  | $           | 29,814 |  |               | $ | 26,106 | 
|                                                     |  |             |        |  |               |  



|    |               
|--- | --------------
|10. | Long-Term Debt



|                                                                                               |                                        |             |         |         |               |   |         |         | 
|---------------------------------------------------------------------------------------------- | -------------------------------------- | ----------- | ------- | ------- | ------------- | - | ------- | ------- | 
|                                                                                               |                                        | (Successor) |         |         | (Predecessor) |  
|                                                                                               |                                        |             |         |         |               |  
|                                                                                               |                                        | August 28,  |         |         | August 30,    |  
|                                                                                               |                                        | 2004        |         |         | 2003          |  
|                                                                                               |                                        |             |         |         |               |  
|81/4% Senior
    subordinated notes due 2012                                                   |                                        | $           | 150,000 |         |               | $ |        |        
|115/8% Senior
    unsecured notes due 2007 (net of unamortized discount of $30 and
    $1,145) |                                        |             | 6,045   |         |               |   | 175,855 |        
|11% Senior subordinated notes due 2007                                                         |                                        |             |        |         |               |   | 41,355  |        
|Senior secured credit facility                                                                 |                                        |             |         |         |               |   |         |        
|                                                                                               | Revolving credit facility due 2010     |             |         |        |               |   |         |        | 
|                                                                                               | Term loan due 2011                     |             |         | 154,613 |               |   |         |        | 
|Former senior secured credit facility                                                          |                                        |             |        |         |               |   | 9,500   |        
|                                                                                               |                                        |             |         |         |               |  
|                                                                                               | Total                                  |             |         | 310,658 |               |   |         | 226,710 | 
|                                                                                               | Less current portion of long-term debt |             |         | (1,550  | )             |   |         |        | 
|                                                                                               |                                        |             |         |         |               |  
|Total long-term debt                                                                           |                                        | $           | 309,108 |         |               | $ | 226,710 |        
|                                                                                               |                                        |             |         |         |               |  



| |                                    
| | -----------------------------------
| | 81/4% Senior
    Subordinated Notes

1 4


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##### Table of Contents



AMERICAN ACHIEVEMENT CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)










| |                                  
| | ---------------------------------
| | 115/8% Senior
    Unsecured Notes

5 8






| |                              
| | -----------------------------
| | 11% Senior Subordinated Notes



50



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##### Table of Contents



AMERICAN ACHIEVEMENT CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






NEW SENIOR SECURED CREDIT FACILITY












FORMER SENIOR SECURED CREDIT FACILITY




51



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AMERICAN ACHIEVEMENT CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|                   |                                        |          |         |         |  
|------------------ | -------------------------------------- | -------- | ------- | ------- | -
|                   |                                        | Amount   |        
|Fiscal Year Ending |                                        | Maturing |        
|                   |                                        |          |        
|2005               |                                        | $        | 1,550   |        
|2006               |                                        |          | 1,550   |        
|2007               |                                        |          | 7,595   |        
|2008               |                                        |          | 1,550   |        
|2009               |                                        |          | 1,550   |        
|Thereafter         |                                        |          | 296,863 |        
|                   |                                        |          |        
|                   | Total                                  |          |         | 310,658 |  
|                   | Less current portion of long-term debt |          |         | (1,550  | )
|                   |                                        |          |        
|                   |                                        | $        | 309,108 |        
|                   |                                        |          |        







|    |                                 
|--- | --------------------------------
|11. | Derivative Financial Information







52



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##### Table of Contents



AMERICAN ACHIEVEMENT CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                              
|--- | -----------------------------
|12. | Commitments and Contingencies

LEASES




|                   |  |           |       |  |         |   |       |  
|------------------ |  | --------- | ----- |  | ------- | - | ----- | -
|                   |  | Operating |       |  |        
|Fiscal Year Ending |  | Expense   |       |  | Capital |  
|                   |  |           |       |  |         |  
|2005               |  | $         | 2,206 |  |         | $ | 1,387 |  
|2006               |  |           | 1,835 |  |         |   | 1,349 |  
|2007               |  |           | 1,322 |  |         |   | 1,332 |  
|2008               |  |           | 817   |  |         |   | 174   |  
|2009               |  |           | 315   |  |         |   |      |  
|Thereafter         |  |           | 2,404 |  |         |   |      |  
|Interest           |  |           |      |  |         |   | (297  | )
|                   |  |           |       |  |         |  
|                   |  | $         | 8,899 |  |         | $ | 3,945 |  
|                   |  |           |       |  |         |  













PENDING LITIGATION












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##### Table of Contents



AMERICAN ACHIEVEMENT CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)












EMPLOYMENT CONTRACTS






|    |                                   
|--- | ----------------------------------
|13. | Employee Compensation and Benefits

POSTRETIREMENT PENSION AND MEDICAL BENEFITS




54



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AMERICAN ACHIEVEMENT CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)







|                                                               |                                                                  |                 |        |        |                 |   |        |         |   |   |                |        |   |   |        |        |  
|-------------------------------------------------------------- | ---------------------------------------------------------------- | --------------- | ------ | ------ | --------------- | - | ------ | ------- | - | - | -------------- | ------ | - | - | ------ | ------ | -
|                                                               |                                                                  | (Successor)     |        |        | (Predecessor)   |  
|                                                               |                                                                  |                 |        |        |                 |  
|                                                               |                                                                  | August 28, 2004 |        |        | August 30, 2003 |  
|                                                               |                                                                  |                 |        |        |                 |  
|                                                               |                                                                  | Taylor          |        |        | CBI             |   |        | Taylor  |   |   | CBI            |       
|                                                               |                                                                  | Pension         |        |        | Postretirement  |   |        | Pension |   |   | Postretirement |       
|                                                               |                                                                  |                 |        |        |                 |   |        |         |   |   |                |       
|Change in benefit obligation:                                  |                                                                  |                 |        |        |                 |   |        |         |   |   |                |        |   |   |        |       
|Obligation beginning of the year                               |                                                                  | $               | 14,216 |        |                 | $ | 4,703  |         |   | $ | 10,851         |        |   | $ | 3,341  |       
|Service cost                                                   |                                                                  |                 | 86     |        |                 |   |       |         |   |   | 397            |        |   |   |       |       
|Interest cost                                                  |                                                                  |                 | 834    |        |                 |   | 274    |         |   |   | 781            |        |   |   | 282    |       
|Actuarial loss (gain)                                          |                                                                  |                 | (1,348 | )      |                 |   | 2,816  |         |   |   | 462            |        |   |   | 1,609  |       
|Benefit payments                                               |                                                                  |                 | (649   | )      |                 |   | (607   | )       |   |   | (542           | )      |   |   | (529   | )     
|Change in discount rate                                        |                                                                  |                 | 525    |        |                 |   |       |         |   |   | 2,267          |        |   |   |       |       
|                                                               |                                                                  |                 |        |        |                 |   |        |         |   |   |                |       
|Obligation, end of year                                        |                                                                  | $               | 13,664 |        |                 | $ | 7,186  |         |   | $ | 14,216         |        |   | $ | 4,703  |       
|                                                               |                                                                  |                 |        |        |                 |   |        |         |   |   |                |       
|Change in fair value of plan assets:                           |                                                                  |                 |        |        |                 |   |        |         |   |   |                |        |   |   |        |       
|Fair value of plan assets, beginning of year                   |                                                                  | $               | 9,461  |        |                 | $ |       |         |   | $ | 8,902          |        |   | $ |       |       
|Actual return of plan assets                                   |                                                                  |                 | 762    |        |                 |   |       |         |   |   | 391            |        |   |   |       |       
|Employer contributions                                         |                                                                  |                 | 627    |        |                 |   | 607    |         |   |   | 710            |        |   |   | 529    |       
|Benefit payments                                               |                                                                  |                 | (649   | )      |                 |   | (607   | )       |   |   | (542           | )      |   |   | (529   | )     
|                                                               |                                                                  |                 |        |        |                 |   |        |         |   |   |                |       
|Fair value of plan assets, end of year                         |                                                                  | $               | 10,201 |        |                 | $ |       |         |   | $ | 9,461          |        |   | $ |       |       
|                                                               |                                                                  |                 |        |        |                 |   |        |         |   |   |                |       
|Plan assets at fair value                                     |                                                                  |                 |        |        |                 |   |        |         |   |   |                |        |   |   |        |       
|                                                               | Unfunded accumulated benefit obligation in excess of plan assets |                 | $      | (3,692 | )               |   | $      | (7,185  | ) |   | $              | (4,755 | ) |   | $      | (4,703 | )
|                                                               | Unrecognized net loss (gain)                                     |                 |        | (877   | )               |   |        |        |   |   |                |       |   |   |        | 1,400  |  
|                                                               | Unrecognized prior service costs                                 |                 |        |       |                 |   |        |        |   |   |                |       |   |   |        | 1,731  |  
|                                                               | Contributions from measurement date to period end                |                 |        | 230    |                 |   |        |        |   |   |                |       |   |   |        |       |  
|                                                               |                                                                  |                 |        |        |                 |   |        |         |   |   |                |       
|Accumulated postretirement benefit cost, current and long-term |                                                                  | $               | (4,339 | )      |                 | $ | (7,185 | )       |   | $ | (4,755         | )      |   | $ | (1,572 | )     
|                                                               |                                                                  |                 |        |        |                 |   |        |         |   |   |                |       




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AMERICAN ACHIEVEMENT CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                                |  |                  |      |   |                |                   |             |  |                 |               |   |                 |   |  |         |     |  |                |   |      |         |  |   |                |  |  |   |      |   |  |   |     |  
|--------------------------------------------------------------- |  | ---------------- | ---- | - | -------------- | ----------------- | ----------- |  | --------------- | ------------- | - | --------------- | - |  | ------- | --- |  | -------------- | - | ---- | ------- |  | - | -------------- |  |  | - | ---- | - |  | - | --- | -
|                                                                |  | (Successor)      |      |   |                | (Predecessor)     |             |  |                 |               |   |                 |   |  |        
|                                                                |  |                  |      |   |                |                   |             |  |                 |               |  
|                                                                |  |                  |      |   |                |                   | (Successor) |  |                 | (Predecessor) |  
|                                                                |  | For the Period   |      |   |                | For the Period    |             |  |                 |               |   |                 |  
|                                                                |  | March 26, 2004  |      |   |                | August 31, 2003  |             |  |                 |               |  
|                                                                |  | August 28, 2004  |      |   |                | March 25, 2004    |             |  | August 30, 2003 |               |   | August 31, 2002 |  
|                                                                |  |                  |      |   |                |                   |             |  |                 |               |   |                 |  
|                                                                |  | Taylor           |      |   | CBI            |                   |             |  | Taylor          |               |   | CBI             |   |  | Taylor  |     |  | CBI            |   |      | Taylor  |  |   | CBI            | 
|                                                                |  | Pension          |      |   | Postretirement |                   |             |  | Pension         |               |   | Postretirement  |   |  | Pension |     |  | Postretirement |   |      | Pension |  |   | Postretirement | 
|                                                                |  |                  |      |   |                |                   |             |  |                 |               |   |                 |   |  |         |     |  |                |   |      |         |  |   |                | 
|Service costs, benefits attributed to service during the period |  | $                | 21   |   |                | $                 |            |  |                 |               | $ | 65              |   |  | $       |    |  |                | $ | 397  |         |  | $ |               |  |  | $ | 349  |   |  | $ |    |  
|Interest cost                                                   |  |                  | 207  |   |                |                   | 104         |  |                 |               |   | 627             |   |  |         | 170 |  |                |   | 781  |         |  |   | 282            |  |  |   | 729  |   |  |   | 240 |  
|Expected return on assets                                       |  |                  | (195 | ) |                |                   |            |  |                 |               |   | (631            | ) |  |         |    |  |                |   | (814 | )       |  |   |               |  |  |   | (769 | ) |  |   |    |  
|Amortization of unrecognized net loss (gain)                    |  |                  |     |   |                |                   | 9           |  |                 |               |   | 162             |   |  |         | 83  |  |                |   | 68   |         |  |   | 33             |  |  |   | 1    |   |  |   | (2  | )
|Amortization of unrecognized net prior service costs            |  |                  |     |   |                |                   | 16          |  |                 |               |   |                |   |  |         | 154 |  |                |   |     |         |  |   | 291            |  |  |   |     |   |  |   | 291 |  
|                                                                |  |                  |      |   |                |                   |             |  |                 |               |   |                 |   |  |         |     |  |                |   |      |         |  |   |                | 
|Net periodic postretirement benefit cost                        |  | $                | 33   |   |                | $                 | 129         |  |                 |               | $ | 223             |   |  | $       | 407 |  |                | $ | 432  |         |  | $ | 606            |  |  | $ | 310  |   |  | $ | 529 |  
|                                                                |  |                  |      |   |                |                   |             |  |                 |               |   |                 |   |  |         |     |  |                |   |      |         |  |   |                | 



|                                     |  |                 |       |  |                |                 |       |  |         |  |   |                |   |  |   |       | 
|------------------------------------ |  | --------------- | ----- |  | -------------- | --------------- | ----- |  | ------- |  | - | -------------- | - |  | - | ----- | 
|                                     |  | (Successor)     |       |  |                | (Predecessor)   |      
|                                     |  |                 |       |  |                |                 |      
|                                     |  | August 28, 2004 |       |  |                | August 30, 2003 |      
|                                     |  |                 |       |  |                |                 |      
|                                     |  | Taylor          |       |  | CBI            |                 |       |  | Taylor  |  |   | CBI            |  
|                                     |  | Pension         |       |  | Postretirement |                 |       |  | Pension |  |   | Postretirement |  
|                                     |  |                 |       |  |                |                 |       |  |         |  |   |                |  
|Accumulated benefit liability        |  | $               | 4,339 |  |                | $               | 7,185 |  |         |  | $ | 4,755          |   |  | $ | 1,572 | 
|Accumulated other comprehensive loss |  |                 |      |  |                |                 |      |  |         |  |   | (5,150         | ) |  |   |      | 







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AMERICAN ACHIEVEMENT CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                  |  |      |       |   |      |  |       |        |  |  |             |  
|----------------- |  | ---- | ----- | - | ---- |  | ----- | ------ |  |  | ----------- | -
|Asset Category    |  | 2004 |       |   | 2003 |  |       | Target | 
|                  |  |      |       |   |      |  |       |        | 
|Equity securities |  |      | 66.0  | % |      |  | 60.0  | %      |  |  | 40.0  60.0 | %
|Debt securities   |  |      | 34.0  | % |      |  | 40.0  | %      |  |  | 25.0  40.0 | %
|Real estate       |  |      |      |   |      |  |      |        |  |  | 5.0  15.0  | %
|Other             |  |      |      |   |      |  |      |        |  |  | 5.0  15.0  | %
|                  |  |      |       |   |      |  |       |        | 
|                  |  |      | 100.0 | % |      |  | 100.0 | %      |  |  | 100.0       | %
|                  |  |      |       |   |      |  |       |        | 





|          |  |   |       | 
|--------- |  | - | ----- | 
|2005      |  | $ | 600   | 
|2006      |  |   | 640   | 
|2007      |  |   | 660   | 
|2008      |  |   | 700   | 
|2009      |  |   | 740   | 
|2010-2014 |  |   | 4,210 | 



EXECUTIVE STOCK AWARD




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AMERICAN ACHIEVEMENT CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


AMERICAN ACHIEVEMENT CORPORATION 401(K) PLAN






|    |             
|--- | ------------
|14. | Income Taxes



|          |          |                      |        |        |                   |   |   |               |  |  |               |      |      |   |   |       |       |  
|--------- | -------- | -------------------- | ------ | ------ | ----------------- | - | - | ------------- |  |  | ------------- | ---- | ---- | - | - | ----- | ----- | -
|          |          | (Successor)          |        |        | (Predecessor)     |   |   | (Predecessor) |  |  | (Predecessor) |     
|          |          |                      |        |        |                   |   |   |               |  |  |               |     
|          |          | For the Period Ended |        |        | Fiscal Year Ended |  
|          |          |                      |        |        |                   |  
|          |          | March 26, 2004-      |        |        | August 31, 2003-  |   |   | August 30,    |  |  | August 31,    |     
|          |          | August 28, 2004      |        |        | March 25, 2004    |   |   | 2003          |  |  | 2002          |     
|          |          |                      |        |        |                   |   |   |               |  |  |               |     
|Federal  |          |                      |        |        |                   |   |   |               |  |  |               |      |      |   |   |       |      
|          | Current  |                      | $      |       |                   |   | $ |              |  |  |               | $    |     |   |   | $     | 1,444 |  
|          | Deferred |                      |        | (3,867 | )                 |   |   |              |  |  |               |      |     |   |   |       |      |  
|State    |          |                      |        |        |                   |   |   |               |  |  |               |      |      |   |   |       |      
|          | Current  |                      |        | (150   | )                 |   |   |              |  |  |               |      | (132 | ) |   |       | (273  | )
|          | Deferred |                      |        | (442   | )                 |   |   |              |  |  |               |      |     |   |   |       |      |  
|          |          |                      |        |        |                   |   |   |               |  |  |               |      |     
|          |          | $                    | (4,459 | )      |                   | $ |  |               |  |  | $             | (132 | )    |   | $ | 1,171 |      
|          |          |                      |        |        |                   |   |   |               |  |  |               |      |     



|                                                   |                                      |                      |        |        |                  |                   |        |   |            |  |   |            |      |   |   |      |       | 
|-------------------------------------------------- | ------------------------------------ | -------------------- | ------ | ------ | ---------------- | ----------------- | ------ | - | ---------- |  | - | ---------- | ---- | - | - | ---- | ----- | 
|                                                   |                                      | (Successor)          |        |        |                  | (Predecessor)     |       
|                                                   |                                      |                      |        |        |                  |                   |       
|                                                   |                                      | For the Period Ended |        |        |                  | Fiscal Year Ended |       
|                                                   |                                      |                      |        |        |                  |                   |       
|                                                   |                                      | March 26, 2004-      |        |        | August 31, 2003- |                   |        |   | August 30, |  |   | August 31, |     
|                                                   |                                      | August 28, 2004      |        |        | March 25, 2004   |                   |        |   | 2003       |  |   | 2002       |     
|                                                   |                                      |                      |        |        |                  |                   |        |   |            |  |   |            |     
|Computed tax (provision) benefit at statutory rate |                                      | $                    | (3,824 | )      |                  | $                 | (1,605 | ) |            |  | $ | (3,705     | )    |   | $ | 361  |      
|State taxes, net of federal benefit                |                                      |                      | (592   | )      |                  |                   | (272   | ) |            |  |   | (87        | )    |   |   | (180 | )    
|Change in valuation allowance and other            |                                      |                      | (43    | )      |                  |                   | 1,877  |   |            |  |   | 3,660      |      |   |   | 990  |      
|                                                   |                                      |                      |        |        |                  |                   |        |   |            |  |   |            |     
|                                                   | Total income tax (provision) benefit |                      | $      | (4,459 | )                |                   | $      |  |            |  |   | $          | (132 | ) |   | $    | 1,171 | 
|                                                   |                                      |                      |        |        |                  |                   |        |   |            |  |   |            |     

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AMERICAN ACHIEVEMENT CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                      |                                       |            |         |         |   |            |   |        |        | 
|------------------------------------- | ------------------------------------- | ---------- | ------- | ------- | - | ---------- | - | ------ | ------ | 
|                                      |                                       | August 28, |         |         |   | August 30, |  
|                                      |                                       | 2004       |         |         |   | 2003       |  
|                                      |                                       |            |         |         |   |            |  
|Deferred tax assets                   |                                       |            |         |         |   |            |   |        |       
|                                      | Allowances and reserves               |            | $       | 1,947   |   |            |   | $      | 1,979  | 
|                                      | Net operating loss carryforwards      |            |         | 44,638  |   |            |   |        | 28,149 | 
|                                      | Accrued liabilities and other         |            |         | 8,632   |   |            |   |        | 6,390  | 
|                                      |                                       |            |         |         |   |            |  
|                                      | Total deferred tax assets             |            |         | 55,217  |   |            |   |        | 36,518 | 
|Less valuation allowance              |                                       |            |        |         |   |            |   | (5,324 | )     
|                                      |                                       |            |         |         |   |            |  
|                                      | Net deferred tax assets               |            |         | 55,217  |   |            |   |        | 31,194 | 
|                                      |                                       |            |         |         |   |            |  
|Deferred tax liabilities              |                                       |            |         |         |   |            |   |        |       
|                                      | Depreciation                          |            |         | 11,511  |   |            |   |        | 7,866  | 
|                                      | Amortization of intangibles           |            |         | 58,971  |   |            |   |        | 23,074 | 
|                                      | Prepaids and other                    |            |         | 414     |   |            |   |        | 254    | 
|                                      |                                       |            |         |         |   |            |  
|                                      | Total deferred tax liabilities        |            |         | 70,896  |   |            |   |        | 31,194 | 
|                                      |                                       |            |         |         |   |            |  
|                                      | Net deferred tax assets (liabilities) |            | $       | (15,679 | ) |            |   | $      |       | 
|                                      |                                       |            |         |         |   |            |  
|Short-term deferred tax assets        |                                       | $          | 10,165  |         |   |            | $ | 6,378  |       
|Long-term deferred tax liabilities    |                                       |            | (25,844 | )       |   |            |   | (6,378 | )     
|                                      |                                       |            |         |         |   |            |  
|Net deferred tax assets (liabilities) |                                       | $          | (15,679 | )       |   |            | $ |       |       
|                                      |                                       |            |         |         |   |            |  





|    |                     
|--- | --------------------
|15. | Stockholders Equity





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AMERICAN ACHIEVEMENT CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




STOCK-BASED COMPENSATION PLAN





















|                                                                 |  |                    |         |          |                 |   |      |                 |          |  |          |   |  |           |      |  |          |  |        |   |  |   |      | 
|---------------------------------------------------------------- |  | ------------------ | ------- | -------- | --------------- | - | ---- | --------------- | -------- |  | -------- | - |  | --------- | ---- |  | -------- |  | ------ | - |  | - | ---- | 
|                                                                 |  | August 30, 2003 to |         |          |                 |   |     
|                                                                 |  | March 25, 2004     |         |          | August 30, 2003 |   |      | August 31, 2002 |         
|                                                                 |  |                    |         |          |                 |   |      |                 |         
|                                                                 |  |                    |         | Weighted |                 |   |      |                 | Weighted |  |          |   |  | Weighted  |     
|                                                                 |  | Shares of          |         |          | Average         |   |      | Shares of       |          |  | Average  |   |  | Shares of |      |  | Average  | 
|                                                                 |  | Common             |         |          | Exercise        |   |      | Common          |          |  | Exercise |   |  | Common    |      |  | Exercise | 
|                                                                 |  | Stock              |         |          | Price           |   |      | Stock           |          |  | Price    |   |  | Stock     |      |  | Price    | 
|                                                                 |  |                    |         |          |                 |   |      |                 |          |  |          |   |  |           |      |  |          | 
|Outstanding at beginning of period                               |  |                    | 97,792  |          |                 | $ | 4.50 |                 |          |  | 72,083   |   |  | $         | 3.86 |  |          |  | 30,858 |   |  | $ | 7.02 | 
|Granted                                                          |  |                    |        |          |                 |   |     |                 |          |  | 29,559   |   |  |           | 6.22 |  |          |  | 41,613 |   |  |   | 1.51 | 
|Exercised                                                        |  |                    |        |          |                 |   |     |                 |          |  |         |   |  |           |     |  |          |  |       |   |  |   |     | 
|Canceled                                                         |  |                    | (1,138  | )        |                 |   | 3.39 |                 |          |  | (3,850   | ) |  |           | 3.18 |  |          |  | (388   | ) |  |   | 7.02 | 
|Conversion of options at merger                                  |  |                    | (96,654 | )        |                 |   |     |                 |          |  |         |   |  |           |     |  |          |  |       |   |  |   |     | 
|                                                                 |  |                    |         |          |                 |   |      |                 |          |  |          |   |  |           |      |  |          | 
|Outstanding at end of period                                     |  |                    |        |          |                 | $ |     |                 |          |  | 97,792   |   |  | $         | 4.50 |  |          |  | 72,083 |   |  | $ | 3.86 | 
|                                                                 |  |                    |         |          |                 |   |      |                 |          |  |          |   |  |           |      |  |          | 
|Options exercisable at period-end                                |  |                    |        |          |                 | $ |     |                 |          |  | 58,413   |   |  | $         | 5.08 |  |          |  | 42,582 |   |  | $ | 5.40 | 
|Weighted average fair value of options granted during the period |  |                    |         |          |                 | $ |     |                 |          |  |          |   |  | $         | 2.64 |  |          |  |        |   |  | $ | 0.76 | 






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AMERICAN ACHIEVEMENT CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|    |                           
|--- | --------------------------
|16. | Related-Party Transactions












|    |                             
|--- | ----------------------------
|17. | Business Segments (Restated)























|                                |  |                                                 |         |  |                                                 |   |            |          |  |             |              |   |  |       |        |  |       |   |        |            |  |   |             |  |  |          |        |  |              |   |        |       |  |   |        |  |  |   |        |  |  |   |        |  |  |   |         | 
|------------------------------- |  | ----------------------------------------------- | ------- |  | ----------------------------------------------- | - | ---------- | -------- |  | ----------- | ------------ | - |  | ----- | ------ |  | ----- | - | ------ | ---------- |  | - | ----------- |  |  | -------- | ------ |  | ------------ | - | ------ | ----- |  | - | ------ |  |  | - | ------ |  |  | - | ------ |  |  | - | ------- | 
|                                |  | (Successor)                                     |         |  | (Predecessor)                                   |  
|                                |  |                                                 |         |  |                                                 |  
|                                |  | For the Period March 26, 2004  August 28, 2004 |         |  | For the Period August 31, 2003  March 25, 2004 |  
|                                |  |                                                 |         |  |                                                 |  
|                                |  | Class                                           |         |  |                                                 |   | Graduation |          |  | Achievement |              |   |  |       | Class  |  |       |   |        | Graduation |  |   | Achievement |  |  |         
|Year Ended August 28, 2004      |  | Rings                                           |         |  | Yearbooks                                       |   |            | Products |  |             | Publications |   |  | Other |        |  | Total |   |        | Rings      |  |   | Yearbooks   |  |  | Products |        |  | Publications |   |        | Other |  |   | Total  | 
|                                |  |                                                 |         |  |                                                 |   |            |          |  |             |              |   |  |       |        |  |       |   |        |            |  |   |             |  |  |          |        |  |              |   |        |       |  |   |        | 
|Net sales                       |  | $                                               | 45,980  |  |                                                 | $ | 91,109     |          |  | $           | 12,315       |   |  | $     | 8,266  |  |       | $ | 9,680  |            |  | $ | 167,350     |  |  | $        | 76,545 |  |              | $ | 20,236 |       |  | $ | 27,351 |  |  | $ | 11,690 |  |  | $ | 10,899 |  |  | $ | 146,721 | 
|Interest expense, net           |  |                                                 | 4,001   |  |                                                 |   | 3,636      |          |  |             | 1,296        |   |  |       | 652    |  |       |   | 672    |            |  | $ | 10,257      |  |  |          | 6,558  |  |              |   | 5,607  |       |  |   | 2,124  |  |  |   | 1,074  |  |  |   | 1,092  |  |  | $ | 16,455  | 
|Depreciation and amortization   |  |                                                 | 3,407   |  |                                                 |   | 4,402      |          |  |             | 1,103        |   |  |       | 823    |  |       |   | 609    |            |  | $ | 10,344      |  |  |          | 2,784  |  |              |   | 3,977  |       |  |   | 902    |  |  |   | 359    |  |  |   | 508    |  |  | $ | 8,530   | 
|Segment operating income (loss) |  |                                                 | 1,552   |  |                                                 |   | 19,465     |          |  |             | (16          | ) |  |       | 1,884  |  |       |   | (1,703 | )          |  | $ | 21,182      |  |  |          | 10,278 |  |              |   | (6,870 | )     |  |   | 3,854  |  |  |   | 4,175  |  |  |   | 435    |  |  | $ | 11,872  | 
|Capital expenditures            |  |                                                 | 1,645   |  |                                                 |   | 947        |          |  |             | 533          |   |  |       | 279    |  |       |   | 261    |            |  | $ | 3,665       |  |  |          | 2,002  |  |              |   | 8,880  |       |  |   | 648    |  |  |   | 729    |  |  |   | 534    |  |  | $ | 12,793  | 
|As of August 28, 2004           |  |                                                 |         |  |                                                 |   |            |          |  |             |              |   |  |       |        |  |       |   |        |            |  |   |             |  |  |          |        |  |              |   |        |       |  |   |        |  |  |   |        |  |  |   |        |  |  |   |         | 
|Goodwill                        |  |                                                 | 71,033  |  |                                                 |   | 64,551     |          |  |             | 22,996       |   |  |       | 11,569 |  |       |   | 11,931 |            |  | $ | 182,080     |  |  |          |        |  |              |   |        |       |  |   |        |  |  |   |        |  |  |   |        |  |  |   |         | 
|Segment assets                  |  |                                                 | 213,220 |  |                                                 |   | 176,097    |          |  |             | 69,028       |   |  |       | 37,323 |  |       |   | 35,318 |            |  | $ | 530,986     |  |  |          |        |  |              |   |        |       |  |   |        |  |  |   |        |  |  |   |        |  |  |   |         | 




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AMERICAN ACHIEVEMENT CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)





|                              |  |               |         |            |           |   |             |          |  |   |              |  |  |       |        |  |       |   |        |  |  |   |         | 
|----------------------------- |  | ------------- | ------- | ---------- | --------- | - | ----------- | -------- |  | - | ------------ |  |  | ----- | ------ |  | ----- | - | ------ |  |  | - | ------- | 
|                              |  | (Predecessor) |        
|                              |  |               |        
|                              |  |               |         | Graduation |           |   | Achievement |          |  |  
|Year Ended August 30, 2003    |  | Class Rings   |         |            | Yearbooks |   |             | Products |  |   | Publications |  |  | Other |        |  | Total |  
|                              |  |               |         |            |           |   |             |          |  |   |              |  |  |       |        |  |       |  
|Net sales                     |  | $             | 127,624 |            |           | $ | 105,038     |          |  | $ | 34,736       |  |  | $     | 20,122 |  |       | $ | 20,911 |  |  | $ | 308,431 | 
|Interest expense, net         |  |               | 11,975  |            |           |   | 9,856       |          |  |   | 3,259        |  |  |       | 1,888  |  |       |   | 1,962  |  |  | $ | 28,940  | 
|Depreciation and amortization |  |               | 4,124   |            |           |   | 7,445       |          |  |   | 1,122        |  |  |       | 667    |  |       |   | 791    |  |  | $ | 14,149  | 
|Segment operating income      |  |               | 16,421  |            |           |   | 10,165      |          |  |   | 3,783        |  |  |       | 8,716  |  |       |   | 753    |  |  | $ | 39,838  | 
|Capital expenditures          |  |               | 3,941   |            |           |   | 5,500       |          |  |   | 1,073        |  |  |       | 19     |  |       |   | 710    |  |  | $ | 11,243  | 
|                             
|As of August 30, 2003         |  |               |         |            |           |   |             |          |  |   |              |  |  |       |        |  |       |   |        |  |  |   |         | 
|Goodwill                      |  |               | 65,630  |            |           |   | 57,420      |          |  |   | 17,862       |  |  |       | 10,297 |  |       |   | 10,850 |  |  | $ | 162,059 | 
|Segment assets                |  |               | 163,490 |            |           |   | 128,920     |          |  |   | 44,498       |  |  |       | 31,966 |  |       |   | 26,627 |  |  | $ | 395,501 | 







|                                |  |               |         |            |           |   |             |          |  |   |              |  |  |       |        |  |       |   |        |   |  |   |         | 
|------------------------------- |  | ------------- | ------- | ---------- | --------- | - | ----------- | -------- |  | - | ------------ |  |  | ----- | ------ |  | ----- | - | ------ | - |  | - | ------- | 
|                                |  | (Predecessor) |        
|                                |  |               |        
|                                |  |               |         | Graduation |           |   | Achievement |          |  |  
|Year Ended August 31, 2002      |  | Class Rings   |         |            | Yearbooks |   |             | Products |  |   | Publications |  |  | Other |        |  | Total |  
|                                |  |               |         |            |           |   |             |          |  |   |              |  |  |       |        |  |       |  
|Net sales                       |  | $             | 125,174 |            |           | $ | 108,942     |          |  | $ | 34,053       |  |  | $     | 16,193 |  |       | $ | 20,016 |   |  | $ | 304,378 | 
|Interest expense, net           |  |               | 10,703  |            |           |   | 9,315       |          |  |   | 2,912        |  |  |       | 1,385  |  |       |   | 1,711  |   |  | $ | 26,026  | 
|Depreciation and amortization   |  |               | 6,233   |            |           |   | 8,214       |          |  |   | 1,696        |  |  |       | 2,440  |  |       |   | 1,129  |   |  | $ | 19,712  | 
|Segment operating income (loss) |  |               | 11,057  |            |           |   | 4,732       |          |  |   | 2,143        |  |  |       | 5,422  |  |       |   | (1,258 | ) |  | $ | 22,096  | 
|Capital expenditures            |  |               | 4,079   |            |           |   | 8,108       |          |  |   | 1,110        |  |  |       | 81     |  |       |   | 869    |   |  | $ | 14,247  | 




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|        |                                                                                         
|------- | ----------------------------------------------------------------------------------------
|Item 9. | Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure














|         |                        
|-------- | -----------------------
|Item 9A. | Controls and Procedures




















PART III







|         |                                                   
|-------- | --------------------------------------------------
|Item 10. | Directors and Executive Officers of the Registrant






|                     |  |     |    |  |          |                                                                    
|-------------------- |  | --- | -- |  | -------- | -------------------------------------------------------------------
|Name                 |  | Age |    |  | Position
|                     |  |     |    |  |         
|David G. Fiore       |  |     | 57 |  |          | President and Chief Executive Officer, Director                    
|Sherice P. Bench     |  |     | 45 |  |          | Chief Financial Officer, Secretary and Treasurer                   
|Charlyn A. Daugherty |  |     | 56 |  |          | Senior Vice President  Manufacturing Operations                   
|Parke H. Davis       |  |     | 62 |  |          | Senior Vice President  Retail Products                            
|Donald J. Percenti   |  |     | 48 |  |          | Senior Vice President  OnCampus and General
    Manager  Printing
|Peter Lamm           |  |     | 53 |  |          | Director                                                           
|Mac LaFollette       |  |     | 40 |  |          | Director                                                           
|W. Gregg Smart       |  |     | 44 |  |          | Director                                                           
|Sanjay Morey         |  |     | 33 |  |          | Director                                                           







David G. Fiore





Sherice P. Bench


63



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Charlyn A. Daugherty


Parke H. Davis





Donald J. Percenti





Peter Lamm


Mac LaFollette


W. Gregg Smart


Sanjay Morey


64



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|         |                       
|-------- | ----------------------
|Item 11. | Executive Compensation






|                            |                            |                        |      |                     |        |                        |            |          |       |            |                 |            |  |        |      |   |            |           |   |         |  |  |                       |        |  |   |   |   |  |   |         |   | 
|--------------------------- | -------------------------- | ---------------------- | ---- | ------------------- | ------ | ---------------------- | ---------- | -------- | ----- | ---------- | --------------- | ---------- |  | ------ | ---- | - | ---------- | --------- | - | ------- |  |  | --------------------- | ------ |  | - | - | - |  | - | ------- | - | 
|                            |                            |                        |      |                     |        | Long-Term Compensation |            |          |      
|                            |                            |                        |      | Annual Compensation |        |                        |            |          |       |           
|                            |                            |                        |      |                     |        |                        | Restricted |          |       | Securities |                 |            |  |        |     
|                            |                            |                        |      |                     |        | Other Annual           |            |          | Stock |            |                 | Underlying |  |        | LTIP |   |            | All Other |  
|Name and Principal Position |                            | Year(1)                |      |                     | Salary |                        |            | Bonus(2) |       |            | Compensation(3) |            |  | Awards |      |   | Options(#) |           |   | Payouts |  |  | Compensation(4)(5)(6) |       
|                            |                            |                        |      |                     |        |                        |            |          |       |            |                 |            |  |        |      |   |            |           |   |         |  |  |                       |       
|                            |                            | (Dollars in thousands) |     
|David G. Fiore              |                            |                        | 2004 |                     |        | $                      | 426,731    |          |       | $          | 2,072,000       |            |  |        |     |   |            |           | 0 |         |  |  | 0                     |        |  | $ | 0 |   |  | $ | 953,594 |  
|                            | President and Chief        |                        |      | 2003                |        |                        | $          | 378,847  |       |            | $               | 300,000    |  |        |      |  |            |           |   | 0       |  |  |                       | 0      |  |   | $ | 0 |  |   |         |  | 
|                            | Executive Officer          |                        |      | 2002                |        |                        | $          | 361,617  |       |            | $               | 300,000    |  |        |      |  |            |           | $ | 936,088 |  |  |                       | 22,500 |  |   | $ | 0 |  |   |         |  | 
|Sherice P. Bench            |                            |                        | 2004 |                     |        | $                      | 230,195    |          |       | $          | 415,000         |            |  |        |     |   |            |           | 0 |         |  |  | 0                     |        |  | $ | 0 |   |  | $ | 250,262 |  
|                            | Chief Financial            |                        |      | 2003                |        |                        | $          | 196,538  |       |            | $               | 115,050    |  |        |      |  |            |           |   | 0       |  |  |                       | 0      |  |   | $ | 0 |  |   |         |  | 
|                            | Officer                    |                        |      | 2002                |        |                        | $          | 182,019  |       |            | $               | 115,000    |  |        |      |  |            |           |   | 0       |  |  |                       | 7,966  |  |   | $ | 0 |  |   |         |  | 
|Charlyn A. Daugherty        |                            |                        | 2004 |                     |        | $                      | 209,616    |          |       | $          | 400,000         |            |  |        |     |   |            |           | 0 |         |  |  | 0                     |        |  | $ | 0 |   |  | $ | 241,132 |  
|                            | Senior Vice President     |                        |      | 2003                |        |                        | $          | 191,154  |       |            | $               | 105,000    |  |        |      |  |            |           |   | 0       |  |  |                       | 0      |  |   | $ | 0 |  |   |         |  | 
|                            | Manufacturing              |                        |      | 2002                |        |                        | $          | 185,292  |       |            | $               | 106,000    |  |        |      |  |            |           |   | 0       |  |  |                       | 6,243  |  |   | $ | 0 |  |   |         |  | 
|                            | Operations                 |                        |      |                     |        |                        |            |          |       |            |                 |            |  |        |      |   |            |           |   |         |  |  |                       |        |  |   |   |   |  |   |         |   | 
|Parke H. Davis              |                            |                        | 2004 |                     |        | $                      | 230,385    |          |       | $          | 390,000         |            |  |        |     |   |            |           | 0 |         |  |  | 0                     |        |  | $ | 0 |   |  | $ | 241,132 |  
|                            | Senior Vice President     |                        |      | 2003                |        |                        | $          | 207,308  |       |            | $               | 108,650    |  |        |      |  |            |           |   | 0       |  |  |                       | 0      |  |   | $ | 0 |  |   |         |  | 
|                            | Retail Sales               |                        |      | 2002                |        |                        | $          | 200,769  |       |            | $               | 108,000    |  |        |      |  |            |           |   | 0       |  |  |                       | 6,243  |  |   | $ | 0 |  |   |         |  | 
|Donald J. Percenti          |                            |                        | 2004 |                     |        | $                      | 258,200    |          |       | $          | 430,000         |            |  |        |     |   |            |           | 0 |         |  |  | 0                     |        |  | $ | 0 |   |  | $ | 241,132 |  
|                            | Senior Vice President     |                        |      | 2003                |        |                        | $          | 236,847  |       |            | $               | 141,000    |  |        |      |  |            |           |   | 0       |  |  |                       | 0      |  |   | $ | 0 |  |   |         |  | 
|                            | OnCampus and               |                        |      | 2002                |        |                        | $          | 217,693  |       |            | $               | 111,000    |  |        |      |  |            |           |   | 0       |  |  |                       | 6,243  |  |   | $ | 0 |  |   |         |  | 
|                            | General Manager  Printing |                        |      |                     |        |                        |            |          |       |            |                 |            |  |        |      |   |            |           |   |         |  |  |                       |        |  |   |   |   |  |   |         |   | 









|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Our 2004 fiscal year ended on August 28, 2004. Fiscal year
    2003 ended on August 30, 2003 and fiscal year 2002 ended on
    August 31, 2002. Executive compensation for 2004, 2003, and
    2002 is for the twelve months ended December 31 of each
    year and based on current compensation.                                                                                                                                                                                                                                                                                                         
|   
|(2) | Amounts in 2004 include payment under the Management Incentive
    bonus program as follows: Mr. Fiore: $300,000;
    Ms. Bench: $135,000; Ms. Daugherty: $120,000;
    Mr. Davis $110,000; Mr. Percenti: $150,000. Amounts in
    2004 also includes a success bonus paid as of the date of the
    Merger as follows: Mr. Fiore: $1,772,000; Ms. Bench:
    $280,000; Ms. Daugherty: $280,000; Mr. Davis:
    $280,000; Mr. Percenti: $280,000. Amounts in 2003 and 2002
    include payments under the Management Incentive bonus program.                                                              
|   
|(3) | The prerequisites and other personal benefits, securities or
    property received by the named executive officers did not exceed
    $50,000 or 10% of the total annual salary and bonus reported for
    the named executive officers in cash of 2004, 2003 and 2002. In
    2002, we have paid $386,088 in taxes associated with the receipt
    by Mr. Fiore in 2002 of 5,500 shares of our
    series A preferred stock.                                                                                                                                                                              
|   
|(4) | Each of the named executive officers have term life insurance
    policies equal to two-times their base salary (maximum of
    $500,000) in the years 2004, 2003 and 2002 and one-times their
    base salary in the year 2001 with a benefit payable to a
    beneficiary selected by the named executive officer upon his or
    her death. We have paid the annual premiums on such policies in
    each of 2004, 2003, and 2002. The annual premium does not exceed
    $910 for any named executive officer. No named executive officer
    is entitled to any cash surrender value in such policies.
|   
|(5) | During 2002 due to the increased concerns after
    September 11, 2001, and the increased travel requirements
    of Mr. Fiore, Mrs. Bench and thirteen other officers
    and executives of the Company, AAC purchased a travel accident
    policy covering Mr. Fiore and Mrs. Bench in the amount
    of $2,500,000 each and $250,000 each for the other 13 named
    executives for a total three year premium of $4,777. The
    beneficiaries of the policy are to be named by the employee, and
    no named executive is entitled to any cash surrender value in
    such policies.                
|   
|(6) | Amounts in 2004 include cancellation of stock options in
    connection with the Merger.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

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Employment Agreements


David G. Fiore.






Sherice P. Bench.







Other Employment Agreements.





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Board Committees








Code of Ethics




Stockholders Agreement




67



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Director Compensation









|         |                                                                   
|-------- | ------------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial Owners and
    Management






|                                                              |                                           |        |         |  |            |  |      |  | 
|------------------------------------------------------------- | ----------------------------------------- | ------ | ------- |  | ---------- |  | ---- |  | 
|                                                              |                                           | Shares |         |  | Percentage | 
|                                                              |                                           |        |         |  |            | 
|American Achievement Holdings LLC(1)                          |                                           |        | 429,851 |  |            |  | 85.0 | 
|                                                              | c/o Fenway Partners, Inc.                 |        |         |  |            |  |      |  | 
|                                                              | 152 West 57th Street                      |        |         |  |            |  |      |  | 
|                                                              | New York, NY 10019                        |        |         |  |            |  |      |  | 
|Investors related to J.P.Morgan Investment Management Inc.(2) |                                           |        | 73,170  |  |            |  | 14.5 | 
|                                                              | c/o J.P.Morgan Investment Management Inc. |        |         |  |            |  |      |  | 
|                                                              | 522 Fifth Avenue                          |        |         |  |            |  |      |  | 
|                                                              | New York, New York 10036                  |        |         |  |            |  |      |  | 
|Mac LaFollette                                                |                                           |        |        |  |            |  |     | 
|Peter Lamm(3)                                                 |                                           |        | 429,851 |  |            |  | 85.0 | 
|W. Gregg Smart                                                |                                           |        |        |  |            |  |     | 
|Sanjay Morey                                                  |                                           |        |        |  |            |  |     | 
|David G. Fiore                                                |                                           |        |        |  |            |  |     | 
|Sherice P. Bench                                              |                                           |        |        |  |            |  |     | 
|Charlyn A. Daugherty                                          |                                           |        |        |  |            |  |     | 
|Parke H. Davis                                                |                                           |        |        |  |            |  |     | 
|Donald J. Percenti                                            |                                           |        |        |  |            |  |     | 
|All executive officers and directors as a group (9 persons)   |                                           |        | 429,851 |  |            |  | 85.0 | 









|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | All of the voting interest of American Achievement Holdings LLC
    are held by Fenway Partners Capital Fund II, L.P., FPIP,
    LLC and FPIP Trust, LLC, each of which are affiliates of Fenway
    Partners, Inc. Accordingly, such entities may be deemed to
    beneficially own the shares of common stock held by American
    Achievement LLC. Each of such entities disclaims beneficial
    ownership of such shares except to the extent of its precuniary
    interest therein.                                                                                                                                                                                      
|   
|(2) | The investors include J.P.Morgan U.S. Direct Corporate
    Finance Institutional Investors II LLC
    (CFII-I), which holds 70,052 shares of common
    stock, J.P. Morgan U.S. Direct Corporate Finance
    Private Investors II LLC (CFII-P), which holds
    2,752 shares of common stock, and 522 Fifth Ave Fund, L.P.,
    (522) which holds 366 shares of common stock.
    Peter Lamm and Richard Dresdale are the founders of Fenway
    Partners, Inc. and each is a managing member of Fenway
    Partners II LLC, the general partner of Fenway Partners
    Capital Fund II, L.P., and each is a managing member of
    each of FPIP, LLC and FPIP Trust, LLC.
|   
|(3) | Mr. Lamm is a founder of Fenway Partners, Inc. a managing
    member of Fenway Partners II LLC, the general partner of
    Fenway Partners Capital Fund II, L.P., and is a managing
    member of each of FPIP, LLC and FPIP Trust, LLC. Accordingly,
    Mr. Lamm may be deemed to beneficially own the shares of
    common stock held by American Achievement Holdings LLC.
    Mr. Lamm disclaims beneficial ownership of such shares
    except to the extent of his pecuniary interests therein.                                                                                                                                                                          

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| |                                                                                                                                                                                                                                                            
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | J.P. Morgan Investment Management, Inc., a registered
    investment advisor and a wholly-owned subsidiary of
    J.P. Morgan Chase & Co., controls the voting and
    disposition of these shares as the investment advisor to CFII-I,
    CFII-P and 522.






|         |                                               
|-------- | ----------------------------------------------
|Item 13. | Certain Relationships and Related Transactions










|         |                                       
|-------- | --------------------------------------
|Item 14. | Principal Accountant Fees and Services



|           |                    |                    |         |         |                   |                |         |                        |  |   |               |         |              |                   |     |    |                 |  |     |    |   |  |     |    |  
|---------- | ------------------ | ------------------ | ------- | ------- | ----------------- | -------------- | ------- | ---------------------- |  | - | ------------- | ------- | ------------ | ----------------- | --- | -- | --------------- |  | --- | -- | - |  | --- | -- | -
|           |                    |                    |         |         |                   |                |         | Percentage of Services | 
|           |                    |                    |         |         |                   |                |         |                        | 
|           |                    |                    |         |         |                   | For the Period |         |                        | 
|           |                    | For the Period     |         |         |                   |                |         |                        |  |  
|           |                    |                    |         |         | For the Year      |                |         | March 26, 2004         |  |   |               |         | For the Year |                  
|           |                    | March 26, 2004     |         |         | August 31, 2003   |                |         | Ended                  |  |   | to August 28, |         |              | August 31, 2003   |     |    | Ended           | 
|           |                    | to August 31, 2004 |         |         | to March 25, 2004 |                |         | August 30, 2003        |  |   | 2004          |         |              | to March 25, 2004 |     |    | August 30, 2003 | 
|           |                    |                    |         |         |                   |                |         |                        |  |   |               |         |              |                   |     |    |                 | 
|           | Audit fees         |                    | $       | 205,000 |                   |                | $       | 194,000                |  |   | $             | 227,000 |              |                   |     | 48 | %               |  |     | 82 | % |  |     | 36 | %
|           | Audit-related fees |                    |         | 84,000  |                   |                |         |                       |  |   |               | 181,000 |              |                   |     | 20 | %               |  |     |   |   |  |     | 29 | %
|           | Tax fees           |                    |         | 137,000 |                   |                |         | 31,000                 |  |   |               | 180,000 |              |                   |     | 32 | %               |  |     | 13 | % |  |     | 29 | %
|           | All other fees     |                    |         |        |                   |                |         | 11,000                 |  |   |               | 35,000  |              |                   |     |   |                 |  |     | 5  | % |  |     | 6  | %
|Total fees |                    | $                  | 426,000 |         |                   | $              | 236,000 |                        |  | $ | 623,000       |         |              |                   | 100 | %  |                 |  | 100 | %  |   |  | 100 | % 





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PART IV







|         |                                                                    
|-------- | -------------------------------------------------------------------
|Item 15. | Exhibits, Financial Statement Schedules and Reports on
    Form 8-K

Exhibits and Financial Statement Schedules






| |                                                                                                                                                       
| | ------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1. Consolidated Financial Statements. See Index to
    Consolidated Financial Statements  Item 8.                                                  
|
| | 2. Financial Statement Schedules. Report of Independent
    Registered Public Accounting Firm and
    Schedule II  Valuation and Qualifying Accounts.
|
| | 3. Exhibits. See Exhibit Index.                                                                                                                     

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SIGNATURES












| |                                     
| | ------------------------------------
| | American Achievement
    Corporation



| |     |                   
| | --- | ------------------
| | By: | /s/ David G. Fiore

| |                        
| | -----------------------
| |                        
| | David G. Fiore         
| | Chief Executive Officer



| |     |                     
| | --- | --------------------
| | By: | /s/ Sherice P. Bench

| |                        
| | -----------------------
| |                        
| | Sherice P. Bench       
| | Chief Financial Officer












|                                     |  |                                      |  | 
|------------------------------------ |  | ------------------------------------ |  | 
|                                    
|/s/ David G. FioreDavid
    G. Fiore |  | Director and Chief Executive Officer
|                                    
|/s/ Peter LammPeter
    Lamm         |  | Director                            
|                                    
|/s/ Mac LaFolletteMac
    LaFollette |  | Director                            
|                                    
|/s/ W. Gregg SmartW.
    Gregg Smart |  | Director                            
|                                    
|/s/ Sanjay MoreySanjay
    Morey     |  | Director                            




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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
















Deloitte & Touche
LLP






72



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SCHEDULE II  VALUATION AND QUALIFYING
ACCOUNTS


AMERICAN ACHIEVEMENT CORPORATION


|                                                     |                                  |                |   |       |                  |  |   |       |  |  |            |        |   |        |   |        |      |  |   |       | 
|---------------------------------------------------- | -------------------------------- | -------------- | - | ----- | ---------------- |  | - | ----- |  |  | ---------- | ------ | - | ------ | - | ------ | ---- |  | - | ----- | 
|                                                     |                                  | Balance at     |   |       |                  |  |   |       |  |  | Balance at |       
|                                                     |                                  | Beginning of   |   |       | Charged to Costs |  |   |       |  |  |            | End of |  
|                                                     |                                  | Period         |   |       | and Expenses     |  |   | Other |  |  | Write-offs |        |   | Period |  
|                                                     |                                  |                |   |       |                  |  |   |       |  |  |            |        |   |        |  
|                                                     |                                  | (In thousands) |  
|Reserves and allowances deducted from asset accounts |                                  |                |   |       |                  |  |   |       |  |  |            |        |   |        |   |        |      |  |   |      
|                                                     |                                  |                |   |       |                  |  |   |       |  |  |            |        |   |        |  
|Reserve on sales representative advances             |                                  |                |   |       |                  |  |   |       |  |  |            |        |   |        |   |        |      |  |   |      
|                                                     | March 26, 2004  August 28, 2004 |                | $ | 2,254 |                  |  | $ | 1,205 |  |  |            |       |   |        | $ | (1,076 | )(1) |  | $ | 2,383 | 
|                                                     | August 31, 2003  March 25, 2004 |                |   | 2,516 |                  |  |   | 813   |  |  |            |       |   |        |   | (1,075 | )(1) |  |   | 2,254 | 
|                                                     | Year ended August 30, 2003       |                |   | 2,843 |                  |  |   | 2,335 |  |  |            |       |   |        |   | (2,662 | )(1) |  |   | 2,516 | 
|                                                     | Year ended August 31, 2002       |                |   | 3,004 |                  |  |   | 2,499 |  |  |            |       |   |        |   | (2,660 | )(1) |  |   | 2,843 | 
|Allowance for doubtful accounts                      |                                  |                |   |       |                  |  |   |       |  |  |            |        |   |        |   |        |      |  |   |      
|                                                     | March 26, 2004  August 28, 2004 |                |   | 3,098 |                  |  |   | 3,790 |  |  |            | 123    |   |        |   | (4,150 | )    |  |   | 2,861 | 
|                                                     | August 31, 2003  March 25, 2004 |                |   | 3,242 |                  |  |   | 3,445 |  |  |            | (160   | ) |        |   | (3,429 | )    |  |   | 3,098 | 
|                                                     | Year ended August 30, 2003       |                |   | 3,525 |                  |  |   | 7,178 |  |  |            | 145    |   |        |   | (7,606 | )    |  |   | 3,242 | 
|                                                     | Year ended August 31, 2002       |                |   | 3,076 |                  |  |   | 8,955 |  |  |            | 38     |   |        |   | (8,544 | )    |  |   | 3,525 | 






|    |                                                                                                                            
|--- | ---------------------------------------------------------------------------------------------------------------------------
|(1) | Represents principally write-offs of terminated sales
    representative amounts and forgiveness of amounts by the Company.

73



---



##### Table of Contents



EXHIBIT INDEX


|        |    |     |             |                                                                                                                                                                                                                                        
|------- | -- | --- | ----------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |     |            
|Number  |    |     | Designation
|        |    |     |            
|        | 2  | .1  |             | Agreement and Plan of Merger by and among AAC Holding Corp., AAC
    Acquisition Corp., American Achievement Corporation and The
    Stockholders Party Hereto dated as of December 24, 2003****                                       
|        | 3  | .1  |             | Certificate of Incorporation of American Achievement Corporation
    with all amendments (f/k/a Commemorative Brands Holding Corp.)**                                                                                                  
|        | 3  | .2  |             | By-Laws of American Achievement Corporation (f/k/a Commemorative
    Brands Holding Corp.)**                                                                                                                                           
|        | 3  | .3  |             | Certificate of Incorporation of Commemorative Brands, Inc. with
    all amendments (f/k/a Scholastic Brands, Inc., Class Rings, Inc.
    and Keepsake Jewelry, Inc.)**                                                                 
|        | 3  | .4  |             | By-Laws of Commemorative Brands, Inc. (f/k/a Scholastic Brands,
    Inc., Class Rings, Inc. and Keepsake Jewelry, Inc.)**                                                                                                              
|        | 3  | .5  |             | Certificate of Incorporation of CBI North America, Inc. with all
    amendments (f/k/a CBI North America, Inc.)**                                                                                                                      
|        | 3  | .6  |             | By-Laws of CBI North America, Inc. with all amendments (f/k/a
    CBI North America, Inc.)**                                                                                                                                           
|        | 3  | .7  |             | Certificate of Incorporation of Taylor Senior Holding Corp.**                                                                                                                                                                          
|        | 3  | .8  |             | By-Laws of Taylor Senior Holding Corp.**                                                                                                                                                                                               
|        | 3  | .9  |             | Amended and Restated Certificate of Incorporation of TP Holding
    Corp. (f/k/a TP Acquisition Corp.)**                                                                                                                               
|        | 3  | .10 |             | By-Laws of TP Holding Corp. (f/k/a TP Acquisition Corp.)**                                                                                                                                                                             
|        | 3  | .11 |             | Certificate of Incorporation of Taylor Publishing Company with
    all amendments (f/k/a Taylor Publishing Company of Delaware)**                                                                                                      
|        | 3  | .12 |             | By-Laws of Taylor Publishing Company (f/k/a Taylor Publishing
    Company of Delaware)**                                                                                                                                               
|        | 3  | .13 |             | Certificate of Limited Partnership of Taylor Publishing
    Manufacturing, L.P.***                                                                                                                                                     
|        | 3  | .14 |             | Taylor Publishing Manufacturing, L.P. Limited Partnership
    Agreement***                                                                                                                                                             
|        | 3  | .15 |             | Articles of Incorporation of Educational Communications, Inc.
    with all amendments (f/k/a Merit Publishing Company)**                                                                                                               
|        | 3  | .16 |             | By-Laws of Educational Communications, Inc.**                                                                                                                                                                                          
|        | 3  | .17 |             | Certificate of Formation of Taylor Manufacturing Holdings, LLC***                                                                                                                                                                      
|        | 3  | .18 |             | Limited Liability Company Agreement of Taylor Manufacturing
    Holdings, LLC***                                                                                                                                                       
|        | 4  | .1  |             | Indenture, dated as of February 20, 2002, among American
    Achievement Corporation, The Bank of New York, as Trustee,
    and the Guarantors**                                                                                       
|        | 4  | .2  |             | First Supplemental Indenture, dated as of July 17, 2003,
    among American Achievement Corporation, The Bank of
    New York, as Trustee, and the Additional Guarantors***                                                            
|        | 4  | .3  |             | Second Supplemental Indenture, dated as of December 24,
    2002, among American Achievement Corporation, The Bank of
    New York, as Trustee, and the Additional Guarantors***                                                       
|        | 4  | .4  |             | Third Supplemental Indenture, dated as of March 15, 2004,
    among American Achievement Corporation, the Guarantors, and The
    Bank of New York****                                                                                 
|        | 4  | .5  |             | Indenture, dated as of March 25, 2004, among The Bank of
    New York, as Trustee, and the Guarantors****                                                                                                                              
|        | 4  | .6  |             | Form of 8.25% Senior Subordinated Notes due April 1,
    2012 (Included in Exhibit 4.5)                                                                                                                                                
|        | 10 | .1  |             | Exchange and Registration Rights Agreement, dated March 25,
    2004, among American Achievement Corporation, the Guarantors,
    and the Purchasers****                                                                               
|        | 10 | .2  |             | Credit Agreement, dated March 25, 2004, by and among
    American Achievement Corporation, the Guarantors, Goldman Sachs
    Credit Partners L.P., Deutsche Bank A.G., Cayman Islands
    Branch, and Deutsche Bank Securities Inc.****
|        | 10 | .3  |             | Pledge and Security Agreement between the Guarantors and Goldman
    Sachs Credit Partners L.P., dated March 25, 2004.****                                                                                                             
|        | 10 | .4  |             | Intercreditor Agreement between Goldman Sachs Credit Partners
    L.P., the Secured Parties, and The Bank of Nova Scotia, dated
    March 25, 2004.****                                                                                



---



##### Table of Contents






|        |    |     |             |                                                                                                                                                                                       
|------- | -- | --- | ----------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |     |            
|Number  |    |     | Designation
|        |    |     |            
|        | 10 | .5  |             | First Amended and Restated Letter Agreement for Fee Consignment
    and Purchase of Gold between Commemorative Brands, Inc. and The
    Bank of Nova Scotia, dated March 25, 2004.****
|        | 10 | .6  |             | Letter Agreement for Addition of Approved Inventory Locations
    between Commemorative Brands, Inc. and The Bank of Nova Scotia,
    dated June 9, 2004.****                         
|        | 10 | .7  |             | Management Advisory Agreement by and between AAC Holding Corp.,
    American Achievement Corporation, and Fenway Partners, Inc.,
    dated March 25, 2004.****                        
|        | 10 | .8  |             | Employment Agreement, dated as of July 13, 1999 by and
    between Commemorative Brands, Inc. and David G. Fiore**                                                                    
|        | 10 | .9  |             | First Amendment to the Employment Agreement by and between
    Commemorative Brands, Inc. and David G. Fiore dated
    February 1, 2002**                                             
|        | 10 | .10 |             | Second Amendment to the Employment Agreement by and between the
    Registrant and David G. Fiore dated December 23, 2003*****                                                        
|        | 10 | .11 |             | Employment Agreement, dated as of December 16, 1996 by and
    between Commemorative Brands, Inc. and Sherice P. Bench, as
    amended**                                              
|        | 10 | .12 |             | First Amendment to the Employment Agreement by and between
    Commemorative Brands, Inc. and Sherice P. Bench, dated
    July 2, 1999*****                                           
|        | 10 | .13 |             | Second Amendment to the Employment Agreement by and between
    Commemorative Brands, Inc. and Sherice P. Bench dated
    April 9, 2004*****                                          
|        | 10 | .14 |             | Employment Agreement, dated as of December 16, 1996 by and
    between Commemorative Brands, Inc. and Donald J. Percenti**                                                            
|        | 10 | .15 |             | First Amendment to the Employment Agreement by and between
    Commemorative Brands, Inc. and Donald J. Percenti dated
    April 9, 2004*****                                         
|        | 10 | .16 |             | Employment Agreement, dated as of December 16, 1996 by and
    between Commemorative Brands, Inc. and Charlyn A. Cook**                                                               
|        | 10 | .17 |             | First Amendment to the Employment Agreement by and between
    Commemorative Brands, Inc. and Charlyn Daugherty dated
    April 9, 2004*****                                          
|        | 10 | .18 |             | First Amendment to the Employment Agreement by and between
    Commemorative Brands, Inc. and Parke Davis dated April 9,
    2004*****                                                
|        | 10 | .19 |             | Third Amendment to the Employment Agreement by and between the
    Registrant and David G. Fiore dated October 21, 2004.******                                                        
|        | 12 | .1  |             | Statement regarding Computation of Ratios of Earnings to Fixed
    Charges                                                                                                            
|        | 21 | .1  |             | Subsidiaries of American Achievement Corporation*****                                                                                                                                 
|        | 31 | .1  |             | CEO Certification Accompanying Period Report Pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002                                                                            
|        | 31 | .2  |             | CFO Certification Accompanying Period Report Pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002                                                                            
|        | 32 | .1  |             | CEO Certification Accompanying Period Report Pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002                                                                            
|        | 32 | .2  |             | CFO Certification Accompanying Period Report Pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002                                                                            









| |   |                                                                                                                             
| | - | ----------------------------------------------------------------------------------------------------------------------------
| | * | Incorporated by reference to the corresponding Exhibit number of
    the Registrant Report on Form 8-K, dated July 30, 2002.



| |    |                                                                                                                                                            
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------
| | ** | Incorporated by reference to the corresponding Exhibit number of
    the Registrant Amended Registration Statement on Form S-4/
    A, dated April 5, 2002.



| |     |                                                                                                                                   
| | --- | ----------------------------------------------------------------------------------------------------------------------------------
| | *** | Incorporated by reference to the corresponding Exhibit number
    the Registrant Report on Form 10-K, dated November 17,
    2003.



| |      |                                                                                                                                  
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------
| | **** | Incorporated by reference to the corresponding Exhibit number of
    the Registrant Report on Form 10-Q, dated July 13,
    2004.



| |       |                                                                                                                             
| | ----- | ----------------------------------------------------------------------------------------------------------------------------
| | ***** | Incorporated by reference to the corresponding Exhibit number of
    the Registrant Report on Form S-4, dated July 22, 2004.






|       |                  
|------ | -----------------
|****** | Previously filed.